A&D Intelligence

Just when you thought XTO would take a breather with $4.3 bil in deals under its belt by mid ‘08, the gas company doubled its money with a big roll of the dice on the storied and legendary Dallas-based Hunt Petroleum Corp. for $4.186 billion. XTO president Bob Simpson is exuberant, calling the deal “a price that one could hardly believe.”

Simpson says he is projecting a robust $1.2 billion cash flow from the Hunt acquisition. “That’s unusual in my career to get that relative cash flow to purhase price for this kind of asset, where they’re legacy, long-lived, have phenomenol opportunities, and they fit like a glove with most of our operations. That’s an exceptional moment in time.”

The Fort Worth producer is gaining some 1.05 trillion cubic feet of gas equivalent in East Texas, Louisiana, the Gulf Coast, and interest in the North Sea. Pleasantly, it will pick up about 100,000 net acres just like that in the Haynesville play with 30,000 of those acres surrounding the recent successful Penn Virginia well that came on at 8 MMcf/d. “We should have three to four horizontals down by the end of the year,” says Simpson. With a closing anticipated in early September, they’re getting to it.

XTO will also gain 15,000 acres in the Bakken, adding to its $1-billion entry into the play just a few days prior to this announcement through its acquisition of Headington Oil, still pending.

The question remains whether XTO can get the deal to the closing table any time this decade.  Hunt Petroleum is the legacy of early 20th Century wildcatter H.L. Hunt and the company is mired in squabbling and an active lawsuit amongst the heirs and operators. Great grandson Al Hill III accuses the patriarchs of mismanagement, fraud and “dumping” the company to hide their high crimes.

XTO boss Simpson’s excitement may lend some credibility to the claim. As XTO will pay $2.6 billion in cash and the rest in stock, Hunt heirs will get to participate in the upside as XTO turns the assets from dividend producing to growth oriented. Says Simpson, “We’ll join hands with (the Hunt family). We’re proud to have them joining us.”

Just don’t invite them to dinner.

 For a detailed account of the Hunt saga, see D Magazine’s article here.

Steve Toon, Editor, A&D Watch; Contributing Editor, Oil and Gas Investor; www.OilandGasInvestor.com; stoon@hartenergy.com

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