Technical expertise allows us to find more reserves than we acquire on producing properties. We create a 'technical-geoscience-operational' arbitrage which is difficult to duplicate. Thus, others have a challenging time replicating our advantage. Said another way; we actualize production and reserves others may not see.

Companies sell assets, across all industries, due to corporate directive, a shift of focus, limited manpower or a lack of capital. XTO takes a comprehensive approach to acquisitions and obtains properties from many companies across the spectrum. For instance, larger corporations may focus resources on high-impact projects overseas where the return potential is large enough to impact their bottom lines. Therefore, domestic producing properties that were once critical might not meet the criteria to justify a meaningful company resource today. When XTO Energy acquires these properties, they have often been undermanaged and have high operating costs. These 'problems' spell opportunity for our company. At the other end of the spectrum, smaller companies may not have the expertise or capital to apply new technology and operational upgrades needed to grow assets. Again, for XTO, this is a specialty.

On a 48 Bcf/day base of U.S. natural gas production, we believe that about 10 Bcfe applies to our model - long-lived, complex and non-conventional. Companies larger than XTO own substantial reserves in these onshore producing basins and, in their hands, the reserves are commonly not a 'focus'. With this in mind, the supply of properties for acquisition tends to replenish itself naturally. So, properties that are marginal to large companies today probably weren't five years ago. By the same token, a number of properties that aren't secondary today should be five years from now.

Furthermore, at XTO we've made a business out of creating opportunities. About 50% of the time we generate acquisitions by making unsolicited bids to owners of properties that meet our criteria. Often these are 'franchise acquisitions' which expand our interests in core areas where we already have extensive ownership positions and expertise.

Our form of exploration is called 'wildcat exploitation'. We apply new technology and ideas in giant hydrocarbon resource basins. These applications unlock trapped reserves from complex formations revealing 'new resource discoveries' in known, low-risk regions.

Our team of 200+ engineers, geologists and geophysicists have years of experience across all the U.S. regions and bring this expertise to bear, meaning laser-like focus on the best rock. Our team has no distractions with foreign investments, offshore exploration or new ventures. We rigorously attack the producing properties, high-grade operations and, in the process, create reserves and value.

Bottom-line - our growth profile is split almost 50/50 between acquisitions and drilling. Over the past three years, XTO has acquired about $7.2 billion in assets to fuel future growth. On top of this, we now own more low-risk drilling inventory than ever in the Company's history, over 11.3 Tcfe of captured upsides. Given the Company's shallow depletion rate on current production, the maintenance capital needed to stay flat is about 25% of cash flow. This means more growth is destined as we manage the strong economics and tight science.

XTO Energy went public in 1993 with 16 million shares. The stock splits have allowed us to increase the number of shares outstanding, thus increasing the average daily trading volume in the stock or 'liquidity'. Now, with more than 500 million basic shares outstanding, an investor can trade large blocks of stock without significantly disrupting trading metrics.