process that is dependent upon the quality of available data and
the interpretation thereof. Estimates by different engineers often
vary, sometimes significantly. In addition, physical factors such
as the results of drilling, testing and production subsequent to
the date of an estimate, as well as economic factors such as
changes in product prices, may justify revision of such estimates.
Because proved reserves are required to be estimated using
12-month average prices,
based on the first-day-of-the-month
price for each month in the period, estimated reserve quantities
can be significantly impacted by changes in product prices.
Accordingly, oil and gas quantities ultimately recovered and the
timing of production may be substantially different from original
The standardized measure of discounted future net cash flows and
changes in such cash flows, as reported in Note 9 to Financial
Statements under Item 8. Financial Statements and
Supplementary Data, is prepared using assumptions required by
the Financial Accounting Standards Board and the Securities and
Exchange Commission. Such assumptions include using 12-month average oil and gas prices,
based on the first-day-of-the-month
price for each month in the period, and year end costs for
estimated future development and production expenditures, including
recovery of cumulative excess costs remaining at year end.
Discounted future net cash flows are calculated using a 10% rate.
Changes in any of these assumptions, including consideration of
other factors, could have a significant impact on the standardized
measure. Accordingly, the standardized measure does not represent
XTO Energy’s or the Trustee’s estimated current market value of
Certain information included in this annual report and other
materials filed, or to be filed, by the Trust with the Securities
and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by XTO
Energy or the Trustee) contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of
1933, as amended, relating to the Trust, operations of the
underlying properties and the oil and gas industry. Such
forward-looking statements may concern, among other things,
potential asset sales or termination of the Trust, reserve-to-production ratios,
future production, development activities and associated operating
expenses, future development plans by area, increased density
drilling, maintenance projects, development, production, regulatory
and other costs, oil and gas prices and expectations for future
demand, pricing differentials, proved reserves, future net cash
flows, production levels, expense reserve budgets, availability of
financing, arbitration, litigation, political and regulatory
matters, such as tax and environmental policy, climate policy,
trade barriers, sanctions, and competition. Such forward-looking
statements are based on XTO Energy’s and the Trustee’s current
plans, expectations, assumptions, projections and estimates and are
identified by words such as “expects,” “intends,” “plans,”
“projects,” “anticipates,” “predicts,” “believes,” “goals,”
“estimates,” “should,” “could,” “would,” and similar words that
convey the uncertainty of future events. These statements are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Therefore, actual financial and operational results may differ
materially from expectations, estimates or assumptions expressed
in, implied in, or forecasted in such forward-looking statements.
Some of the risk factors that could cause actual results to differ
materially are explained in Item 1A. Risk Factors.
Quantitative and Qualitative Disclosures about Market
Not required for smaller reporting companies; the Trust has elected
to omit this information.