XTO Energy purchased by Exxon Mobil for $31 billion! XTO Energy, a natural gas producer is expected to be purchased by Exxon Mobil for $31 billion in stock and the assumption of $10 billion in debt, the largest energy merger in years.
Under the terms of the deal, Exxon will pay XTO shareholders .7098 common shares for each of their XTO shares, or about $51.69 based on Friday’s closing prices. The deal, which is taking advantage of low natural gas prices, represents a 25 percent premium for XTO’s shares.
The deal would give Exxon the equivalent of about 45 trillion cubic feet of natural gas throughout the United States, in a bet that demand will continue to rise. XTO, founded in 1986, is the nation’s largest domestic producer of natural gas.
XTO Energy describes itself in the following way on its Web site:
XTO Energy Inc. has grown from its inception in 1986 to one of the nation’s largest independent oil and gas producers. Our proven strategy has built a domestic reserve base with greater than 2.06 billion barrels of oil equivalent and a track record of increasing production and reserves, with a compound annual growth rate of about 24% and 29% respectively since going public in 1993.
“XTO is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees,” Rex Tillerson, Exxon’s chief executive, said in a statement.
Exxon’s deal has prompted speculation among analysts over which natural gas producers may be up for sale next, with companies like Devon Energy now considered potential takeover targets.
Exxon said that after the deal’s close, expected in the second quarter next year, it would keep XTO as an upstream business unit to develop natural gas resources from unconventional sources like shale rock. The business will remain in XTO’s headquarters in Fort Worth, Tex.
Exxon was advised by JPMorgan Chase, while XTO was advised by Barclays Capital and Jefferies.
