US natural gas producer XTO Energy Inc. today said it will pay $4.19 billion in cash and stock to buy closely-held Hunt Petroleum Corp, as it moved to boost its reserves and production by up to a third.

Owners of Hunt Petroleum, originally created by late billionaire HL Hunt, will receive $2.6 billion in cash and about $1.6 billion in XTO stock, the Fort Worth, Texas-based buyer said in a statement.

The transaction will boost XTO's gas output by 12 per cent, oil production by 16 per cent and gas liquids by 14 per cent, according to the statement. Gas accounts for about 80 per cent of the company's output.

Daily production of 197 million cubic feet, 8,500 barrels of oil and 2,300 barrels of natural gas liquids will be added to XTO's production after the expected closing date of 3 September.

"With the current outlook for commodity prices and our development plan, we have facilitated a history-making deal for XTO which should generate over $1.2 billion in cash flow next year," said the company, marking its second major acquisition in two weeks, after a $1.85 billion purchase announced last month.

XTO said it's locking in sales of 100 million cubic feet of daily output, or 56 per cent of the gas production it will gain by acquiring Hunt, for 28 months at $11.08 per thousand cubic feet.

The Hunt properties hold the equivalent of 1.05 trillion cubic feet of gas, according to an estimate by XTO's engineers. In addition to the East Texas and Louisiana fields, the assets include onshore and offshore reserves in Mississippi, Alabama, the North Sea and North Dakota.

With this acquisition, XTO is effectively paying less than $4 per thousand cubic feet of gas, one-third current US prices for a fuel that has risen even faster than crude oil this year.

XTO Energy shares rose $1.91or 2.8 per cent, to $69.57 after it said the purchase will allow it to boost its 2008 production growth target to about 29 per cent from its earlier view of 23 per cent.

It also said it expects 2009 production growth of 20 per cent, with a preliminary 2009 development budget of $4 billion to $4.5 billion. Even before this news, the stock has enjoyed a meteoric 32 per cent rise this year at a time when world markets have faltered.

XTO chairman and CEO Bob Simpson said the deal to buy the "legacy properties" comes after decades of development by Hunt Petroleum Corp. "They have yielded robust production, reserves and income for private family interests," Simpson said. "Now in XTO's hands, we plan to accelerate the activities and know that the assets will achieve even more.

Hunt Petroleum traces its roots back to 1921, when HL Hunt drilled his first well in El Dorado, Arkansas. Hunt Oil Company was formed in 1934, and the company moved operations to Dallas in 1937. The Hunt Petroleum Corp. was formed in 1985.

The company has been 53 per cent owned by the Margaret Hunt Trust Estate and 47 per cent by the Haroldson L Hunt Jr. Trust Estate, now controlled by the two eldest children of the late HL Hunt and Lyda Bunker Hunt. The heirs had been looking for a buyer after getting into a disagreement after the founder's eldest daughter, Margaret Hunt Hill, died last year.