RBC I ExxonMobil and XTO Energy, two of the energy players in the Piceance Basin, announced Monday an all-stock agreement valued at $41 billion, Exxon’s biggest purchase since buying Mobil Corp. 10 years ago.
The acquisition — pending shareholder and regulatory approval — will result in creation of a new organization focused on developing sources of unconventional natural gas, such as tight gas, shale gas and coalbed methane.
But, for now, it will be business as usual.
“Essentially, (Monday’s) announcement was actually an announcement of an agreement, which will require agreement by the shareholders of XTO, as well as regulatory clearance,” said Alan Jeffers, an ExxonMobil spokesman in Irving, Texas, near Dallas. “We expect the agreement to be completed in the second quarter of 2010. So, nothing will happen until then. We’re just carrying on normal business.”
The transaction value includes $10 billion of existing XTO debt.
Jeffers said the deal is “meant to bring together two highly complimentary organizations. Our plan is to create a new organization that will focus solely on unconventionals. We see this as adding value (to ExxonMobil) and helping us focus on the production of unconventionals.”
One “critical piece” of that strategy is the Piceance Basin, Jeffers said.
“We intend to build a new organization, and the Piceance will be a very significant part of that,” Jeffers said. “The intent is to open up new opportunities for natural gas. We see natural gas as a growth energy source. Right now, for example, we’re functionally structured. One of our divisions is our producing organization that manages the Piceance Basin. We want to gather up all of the expertise of unconventional resources and put them together in a single place to help open up new resources.”
Combined, the two companies would reportedly hold the largest unconventional natural gas acreage portfolio in the industry, at nearly 8 million acres worldwide.