Maybe "ask and ye shall receive" really does work.
I mean, it was only a week ago when I said it was strange that gas and coal prices were down when the weather was seemingly so hot. A week later and gas is 22% higher and shares of XTO Energy
Gas and oil prices will most likely continue to skitter across the board, but XTO is a company that I think Fools can seriously consider if they want to play in that sector. Revenue for the second quarter jumped another 42%, as the company coupled strong price growth (15% in natural gas) with equally strong production growth (about 16% overall). Just as impressive to me, the company's production costs dropped about 9% on a per-mcfe basis; that's part of the beauty of investing in low-cost producers.
Things are going well enough at XTO's properties for management to boost production growth guidance for the rest of the year. Let's remember that this company is sitting on some potentially sizable unbooked reserves -- meaning, in part, that future drilling could continue to boost reserves and the company's organic replacement rate. Moreover, while tight gas is about two-thirds of the company's production base, XTO specializes in these unconventional properties and manages to do more with them than many other companies could.
While there is some periodic concern about XTO's hedging, let's keep it in perspective. XTO does hedge, but not much more than is usual in this sector. It hedges quite a bit less than Canadian Natural
XTO is certainly one of my favorite energy companies today, and even with the nice run-up from last week, it's just on the cusp of what I consider a good enough margin of safety. It's certainly worth looking at other high-quality energy names like Apache
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).