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 17, 2001

We were quite disappointed to see XTO slip just enough in the early going yesterday to trigger our $28.50 stop. Perhaps some of you missed this exit price because the stock did not trade there for very long and then subsequently roared to a new high. For those of you still following XTO, please remember that the stock will be paying its 3:2 stock split on June 5th. Additionally, XTO will be officially changing its name to XTO Energy, Inc. on June 1st but will continue to trade on the NYSE with the symbol XTO.

Picked May 6th @ $24.83
Profit/Loss +3.67 (15%) (Stopped Wednesday @ $28.50)
Best Profit +5.27 (21%)

May 15, 2001

The AMEX Oil and Gas Index (XOI) has been one bright spot for the market this week. Today the XOI rallied 3.37 to 584.14. We suggested in our updates last week that XTO might be rallying because of takeover speculation. We were a little ahead of most on this supposition. Yesterday saw another major acquisition in the oil and gas industry, as Kerr-McGee (NYSE:KMG) agreed to purchase HS Resources (NYSE:HSE) for $1.7 billion. During coverage of the story of increasing acquisition activity in the oil and gas sector, CNBC specifically included XTO on a short list of potential acquisition targets. This story probably contributed to XTO's strong move so far this week. The rally has enabled us to raise our stop to $28.50. The next entry opportunity may present itself it XTO can trade through today's high of $29.90 and accomplish this move with first hour trading volume exceeding 200,000 shares. The longer term technical picture looks strong because the MACD, OBV and Money Flow are all breaking out and the RSI still has room before an overbought condition is indicated.

Picked May 6th @ $24.83
Change since picked +4.87
Stop Loss @ $28.50

May 13, 2001

What a difference a week can make. Two weeks ago, XTO was dropping to the bottom end of its range due to industry reports that indicated that there was a rise in oil and gasoline inventories. XTO dropped to $23.63 in reaction to this news, despite posting solid quarterly profits of $2.00 a share that same week. The recovery last week was probably due to the fact that mergers and acquisitions are heating up in the oil and gas world. Additionally, XTO may have rallied because it is scheduled to pay out a 3:2 split on June 5th. This week's trading direction depends upon whether or not XTO can keep moving higher and take out solid resistance at $28.75 or simply pull back within the current trading range. We have raised our stop to $27.00, just in case the second scenario comes to fruition. Otherwise, traders may be interested in adding to positions if XTO can trade above $28.75, accompanied by midday volume exceeding 350,000 shares. The MACD and Money Flow are both positive and it is encouraging for bulls that the RSI has plenty of upside room before issuing an overbought signal.

Picked May 6th @ $24.83
Change since picked +3.17
Stop Loss @ $27.00