XTO Energy (XTO)

XTO Energy (XTO - Analyst Report) remains well positioned to provide another record performance in 2009 on the back of its impressive portfolio of producing assets and industry-leading cost metrics. The company is expected to post 16% volume growth this year and generate free cash flow in excess of $2 billion, of which at least $1.25 billion will go towards debt reduction.

Also, having already locked in nearly 80% of 2009 production at very attractive prices, the company has smoothed out the commodity-price risk. As such, we are maintaining our Buy recommendation on XTO shares.

Our new $60 price objective, raised from $45 before, reflects 2009 P/CF and EV/EBITDA multiples of 7.0x and 5.0x, respectively, well within historical trading ranges.