exxon mobil buy xto energy
This Monday, Exxon Mobil has agreed to buy XTO Energy in all-stock deal which have value for USD $31 billion. It’s the largest energy deals in this year as the NY Times reported. It’s mean Exxon Mobil have a new rush to own natural gas assets by major integrated producers, and perhaps the start of a significant consolidation in energy industry.
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 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.
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