ExxonMobil/XTO deal augurs strong promise for natural gas

Posted on 14 December 2009

XOM-XTOExxonMobil Corp and XTO Energy Inc announced on 14 December, 2009, an all-stock transaction valued at $41 billion. The acquisition agreement, which is subject to XTO stockholder approval and regulatory clearance, will enhance ExxonMobil’s position in the development of unconventional natural gas and oil resources.

“Despite current gloom and doom on natural-gas fundamentals, this merger is a strong indicator that the longer view for US natural gas is promising,” commented IADC Group Vice President/Publisher Mike Killalea. “The environmental benefits of natural gas are far and away superior to other energy sources, such as coal, both in terms of resource exploitation and in green-house gas generation. Drilling for natural gas is a far less intrusive – and safer – process than mining for coal. Further, natural gas is a “just in time” fuel, and does not require the enormous infrastructure investment or lengthy time line of nuclear power.”

Under the terms of the agreement, approved by the boards of directors of both companies, ExxonMobil has agreed to issue 0.7098 common shares for each common share of XTO. This represents a 25 percent premium to XTO stockholders. The transaction value includes $10 billion of existing XTO debt and is based on the closing share prices of ExxonMobil and XTO on December 11, 2009.

Rex W Tillerson, chairman and chief executive officer of ExxonMobil, said the agreement is good news for the United States economy and energy security, as it will enhance opportunities for job creation and investment in the production of America’s own clean-burning natural gas resources.

“XTO is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees. XTO’s strengths, together with ExxonMobil’s advanced R&D and operational capabilities, global scale and financial capacity, should enable development of additional supplies of unconventional oil and gas resources, benefiting consumers both here in the United States and around the world,” Mr Tillerson said.

XTO’s resource base is the equivalent of 45 trillion cubic feet of gas and includes shale gas, tight gas, coal bed methane and shale oil. These will complement ExxonMobil’s holdings in the United States, Canada, Germany, Poland, Hungary and Argentina.

Following the transaction closing, ExxonMobil intends to establish a new upstream organization to manage global development and production of unconventional resources, enabling the rapid development and deployment of technologies and operating practices to increase production and maximize resource value. The new organization will be located in Fort Worth, Texas, in XTO’s current offices.

Bob R Simpson, chairman and founder of XTO, said that over the company’s 23-year history, XTO has developed technical expertise and has assembled a substantial, high-quality and diverse resource base in producing basins across the United States.

“XTO has a proven ability to profitably and consistently grow production and reserves in unconventional resources,” said Simpson. “As the world’s leading energy company, ExxonMobil will build on our success and open new opportunities for the development of natural gas and oil resources on a global basis.”

Leave a Reply

*

FEATURED MICROSITES


Recent Drilling News

  • 28 August 2014

    DNV GL launches interactive Arctic risk map

    DNV GL has developed an interactive Arctic Risk Map to present the risks associated with offshore and maritime activities in the Arctic. The map aims to provide stakeholders...

  • 27 August 2014

    Video: Aviation safety program encourages employees to voluntarily report safety issues

    Since 2009, there have been no passenger fatalities on domestic airlines in the US, Ronny “Ronoo” Monsour, VP of Sales for Check-6, said. Mr Monsour also a pilot for...

  • 27 August 2014

    Vestigo Petroleum plans ‘manufacturing approach’ to marginal fields offshore Malaysia

    Vestigo Petroleum, a wholly owned subsidiary of Malaysian NOC Petronas Carigali, is about to put a tender out for its first rig on a first drilling program offshore...

  • 27 August 2014

    Case study from mining: Image-driven safety campaign removes communication barriers

    In the world of process safety, people, equipment, the environment and reputation are some of industry’s greatest assets, Marlane Kayfes, Senior Technical Writer...

  • 26 August 2014

    Video: Evolving asset maintenance requires quality data, input

    Asset reliability is a critical component to meeting business goals and expectations when it comes to safety, the environment and production. As the industry faces...

  • Read more news