Cross Timbers Oil Co. is engaged in the acquisition,development, exploitation, and exploration of oil & gas producing properties and in the production, processing and transportation of oil & natural gas. For the 9 months ended 9/30/00, total revenues increased 72% to $395.5M. Net incomeapplicable to Common rose 66% to $65.4M. Results reflect increases in oil, gas and natural gas liquid production, partially offset by a $35.4M loss in derivative fair value.

May 6, 2001

Cross Timbers is a land based oil and natural gas exploration, drilling and production company that primarily conducts its business in the oil fields of Texas and Oklahoma. The stock had a very interesting past week. On Wednesday, XTO reported record first quarter results of $1.14 a share, which was $0.21 above consensus estimates. More importantly, the company guided analysts higher for the second quarter as well as for the rest of the fiscal year. However, all of this good news could not keep the stock from succumbing to Wednesday’s industry wide sell brought about by a government report confirming sizable increases in petroleum inventories. XTO found some good support at $23.63 during the sell off (please note that our initial stop of $23.50 is just below this support). The good news is that XTO started coming back on Thursday. The bounce may be due in part by the fact that XTO is planning to split its shares 3:2 on June 5th. Traders may want to pick up XTO if it opens Monday near where it closed on Friday. One might want to be cautious if XTO finds stiff resistance at the 50-DMA of $26.34. If XTO can close above the 50-DMA it may encounter resistance again at $28.75.

Picked May 6th @ $24.83
Change since picked +0.00
Stop Loss @ $23.50

May 10, 2001

Our crystal ball was static free this week when we suggested that XTO might run straight to resistance of $28.75 once it breached its 50-DMA of $26.50. This is exactly what happened this week (to be honest the rally stopped at $28.47, but close enough). We have decided to protect our profits by raising our stop to $26.50. The next trade opportunity on this regional oil drilling concern could present itself tomorrow if the stock can trade above $28.75 accompanied by midday volume exceeding 350,000 shares. In the event of a pullback, another entry scenario may present itself if XTO descends to $26.58 and begins to tick up. At this point, XTO's technical indicators are neutral to slightly positive. The MACD is positive but is trading in a tight range. The RSI is suggesting that there is plenty of upside potential before it becomes overbought. The bottom line is that XTO may be stuck in a trading range. That said, at least we picked up coverage at the bottom end of this range.

Picked May 6th @ $24.83
Change since picked +2.62
Stop Loss @ $26.50

May 8, 2001

Cross Timbers Oil enjoyed a very strong day, even though gains in the AMEX Oil and Gas Index (XOI) were modest. It is entirely possible that XTO is a beneficiary of a consolidation trend within the industry. Barrett Resources (NYSE:BRR) agreed to be acquired yesterday by Williams Cos (NYSE:WMB), and, consequently, enjoyed a nice spike up in its share price. Cross Timbers Oil and Barrett Resources are similar companies because both are land based regional drillers. Today's rally was technically significant because XTO crossed over and closed above its 50-DMA of $26.41. The last time this event occurred, XTO traded straight to $28.75. XTO may test this resistance soon; therefore, additional positions could probably be added tomorrow assuming XTO stays above the 50-DMA and does not gap up to the $28.75 resistance on the open. Today's volume of 888,700 was solid and we would be more encouraged about adding to positions if XTO starts ticking up with first hour trading volume exceeding 200,000 shares. Even more encouraging is the fact that a rally tomorrow would likely cause the MACD to issue a buy signal. Please note that we have raised our trailing stop to $25.50.

Picked May 6th @ $24.83
Change since picked +2.02
Stop Loss @ $23.50