ExxonMobil to boost unconventional focus by acquiring XTO

ExxonMobil Corp. has agreed to buy XTO Energy Inc. in an all-stock deal valued at $41 billion that will be part of a strengthened focus by the energy giant on unconventional resources.

Dec 14th, 2009

By OGJ editors
HOUSTON, Dec. 14
-- ExxonMobil Corp. has agreed to buy XTO Energy Inc. in an all-stock deal valued at $41 billion that will be part of a strengthened focus by the energy giant on unconventional resources.

Since its founding in 1986, XTO has grown largely by acquiring mature producing properties and expanding reserves through the aggressive application of technology. It now holds large interests in major US shale, tight gas, and coalbed methane plays as well as the Bakken oil shale.

ExxonMobil said that after the transaction closes it will create an upstream organization to manage global development and production of unconventional resources. Outside the US, the company holds interests in unconventional resources in Canada, Germany, Poland, Hungary, and Argentina.

It estimated XTO’s resource base at 45 tcf of gas equivalent.

XTO ranks No. 8 in this year’s OGJ150 group of oil and gas producers with headquarters in the US, based on 2008 assets of $38.3 billion (OGJ, Sept. 21, 2009, p. 22). The ranking was one position below Chesapeake Energy Corp. and a position above Devon Energy Corp.

XTO’s production
In this year’s third quarter, XTO produced 2.42 bcfd of gas, 65,822 b/d of oil, and 22,010 b/d of natural gas liquids. It reported reserves on Dec. 31, 2008, of 13.86 tcf of gas equivalent, of which 85% was gas and 15% liquids, 64% proved developed producing and 36% proved undeveloped.

About 30% of XTO’s gas production comes from shales. The company’s net land positions in major shale plays are Barnett, 277,000 acres; Marcellus, 280,000 acres; Fayetteville, 380,000 acres; Woodford, 160,000 acres; and Haynesville, 100,000 acres.

Its Bakken oil shale position is 450,000 net acres.

About 45% of the company’s gas production is from tight gas basins, including Williston, Green River, Uinta, Piceance, San Juan, Permian, Anadarko, Arkoma, East Texas, Arkla, Gulf Coast, and Appalachian.

One of the company’s key plays is the Freestone trend of East Texas, where it holds 381,000 net acres and produced an average 816 MMcfd of gas, 598 MMcfd net to XTO, in the third quarter.

XTO’s position there and elsewhere expanded with its September 2008 merger of Hunt Petroleum Co. in a cash and stock acquisition worth $4.2 billion.

The ExxonMobil acquisition remains subject to approvals by regulators and XTO shareholders. The boards of both companies have approved the deal. About $10 billion of the acquisition value represents assumption of XTO debt.

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