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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MAY 20, 1997
CROSS TIMBERS OIL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-10662 75-2347769
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
810 HOUSTON STREET, SUITE 2000, FORT WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)
(817) 870-2800
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On May 20, 1997, Cross Timbers Oil Company, a Delaware corporation ("the
Company"), issued news release number 97-14 (Exhibit 99.1) regarding
announcements made at its annual meeting of shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Number
and Description Page
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99.1 Cross Timbers Oil Company News Release
Number 97-14 4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROSS TIMBERS OIL COMPANY
Date: June 2, 1997 By: /s/ LOUIS G. BALDWIN
-----------------------------------
Louis G. Baldwin
Senior Vice President and
Chief Financial Officer
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EXHIBIT 99.1
[CROSS TIMBERS OIL COMPANY NEWS RELEASE LETTERHEAD]
Number: 97-14
CROSS TIMBERS OIL PLANS 50% GROWTH IN CASH FLOW
AND RESERVES PER SHARE OVER NEXT TWO YEARS
FORT WORTH, TX (MAY 20, 1997) -- At its Annual Meeting today, Cross Timbers
Oil Company's (NYSE-XTO) Chairman and CEO Bob R. Simpson announced strategic
goals for 1998 and 1999 including 50% increases in cash flow per share and
proved reserves per share. Mr. Simpson said that, with the recent completion of
a $39.5 million acquisition, he believes the Company's previously announced 1997
goals will be achieved, assuming continued drilling success and current
commodity prices.
"Last year we challenged ourselves to achieve 50% growth over a two-year
period beginning January 1, 1996 and ending December 31, 1997," Simpson said.
"With that goal in sight, we have resolved to duplicate that ambitious
achievement by again establishing a new 50% growth goal for the period beginning
January 1, 1998 and ending December 31, 1999. Specifically, our goal is to
increase cash flow to $4.45 per share in 1998 and to $5.50 in 1999, an aggregate
increase of 50% from 1997's goal of $3.67. Proved reserves at year-end 1999 are
targeted at 8.1 barrels of oil equivalent (BOE), again up 50% from the 5.4 BOE
we expect for year-end 1997. These goals assume current commodity price
levels."
The Company plans to make strategic acquisitions totaling $260 to $280
million between now and the end of 1999. Additional expenditures may be made
for repurchase of up to 1.6 million shares remaining under the currently
authorized two million share common stock repurchase program. The Company's
Board of Directors believes the current market price of Cross Timbers' common
stock does not reflect the underlying value of the Company's assets and its
future prospects.
Annual exploration and development expenditures of $70 to $90 million are
expected in 1998 and in 1999, depending on drilling results, property
acquisitions and commodity prices. Higher-risk expenditures, including step-out
development and exploratory drilling, are targeted at up to 20% of these
amounts.
"We expect development expenditures to be funded from cash flow while
acquisitions and stock repurchases will be funded with a combination of cash
flow and debt," Simpson added. "With our recent completion of $125 million in
Senior Subordinated Notes, we could immediately fund in excess of $260 million
in acquisitions with low-cost bank financing.
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PAGE 2
CROSS TIMBERS OIL PLANS 50% GROWTH
"We believe the optimum level of leverage for the Company is between 33%
and 40% of underlying value. This has historically meant debt of about $2.20
per BOE. However, with the sustained improvement in commodity prices over the
past year, a somewhat higher level is appropriate. Our goals for 1998 and 1999
incorporate a modest increase in debt to $2.40 per BOE."
Steve Palko, Cross Timbers' President, reviewed the Company's participation
in the active Cotton Valley Pinnacle Reef play in East Texas. "We own more than
8,700 acres covering 11 reef anomalies in the Cotton Valley Pinnacle Reef play,
currently the most exciting domestic exploration play. These wells produce at
initial rates up to 50 million cubic feet per day with estimated proved reserves
up to 80 billion cubic feet," Palko noted. "We expect further refinement of the
anomalies by 3-D seismic and plan to lessen our risk by observing other
operators' tests of geologic concepts near our acreage before we drill. This
strategy can be employed because our acreage is held by production or under
five-year leases."
Cross Timbers Oil Company, one of the nations's fastest growing
independents, is engaged in the acquisition, exploitation and development of
quality, long-lived producing oil and gas properties. The Company, whose
predecessor companies were established in 1986, completed its initial public
offering in May 1993. Its properties are concentrated in Texas, Oklahoma,
Kansas, New Mexico and Wyoming.
CONTACT: LOUIS G. BALDWIN
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CROSS TIMBERS OIL COMPANY
817/870-2800
Statements concerning results of future development expenditures, strategic
acquisitions, cash flow per share, proved reserves and debt levels are forward-
looking statements. These statements are based on assumptions concerning
commodity prices, drilling results and production, administrative and other
costs that management believes are reasonable based on currently available
information; however, management's assumptions and the Company's future
performance are both subject to a wide range of business risks and there is no
assurance that these goals and projections can or will be met. In addition,
acquisitions that meet the Company's profitability, size, geographic and other
criteria may not be available on acceptable economic terms. Further information
is available in the Company's filings with the Securities and Exchange
Commission, which are incorporated by this reference as though fully set forth
herein.
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