ExxonMobil Corp. on Friday completed its $43 billion agreement to buy domestic shale king XTO Energy Inc. and said it is using the transaction to create an organization focused on global development and production of unconventional resources.
Under the agreement, approved by XTO stockholders at a special meeting Friday, the new organization would continue to be known as XTO Energy Inc. and maintain its head office location in Fort Worth, TX. The merger was announced last December (see Daily GPI, Dec. 15a; Dec. 15b).
Jack Williams, a former vice president of ExxonMobil Development Co., was elected president of XTO, while former XTO CEO Keith Hutton was named executive vice president of the new organization.
“With this agreement, we are combining XTO’s skills, capabilities and asset base with ExxonMobil’s advanced research and development and operational capabilities, global scale and financial capacity,” said Williams. “The new organization will create the opportunity for more jobs and investment in the development and production of clean-burning natural gas both here in the United States and around the world.”
XTO’s resource base is estimated at 45 Tcfe of gas and includes shale gas, tight gas, coalbed methane, shale oil and conventional oil and gas production. The assets are expected to complement the Irving, TX-based major’s holdings in the United States, Canada, Germany, Poland, Argentina and Indonesia.
Standard & Poor’s Ratings Services (S&P) said the XTO acquisition “provides ExxonMobil with an attractive U.S. onshore unconventional natural gas play with its 12.5 Tcf of proved natural gas reserves.”
Most of XTO’s 3,300 employees will become part of the new organization, which Hutton said had been planned since the agreement was announced.
“ExxonMobil worked closely with XTO’s management to ensure employees understand how important they are to the future success of the new organization,” said Hutton. “XTO’s employees bring the ability to enhance ExxonMobil’s global operations through the vast experience they have gained in innovative and efficient resource development in the United States.”
ExxonMobil CEO Rex W. Tillerson called the completion of the agreement “good news” for the country.
“ExxonMobil’s Energy Outlook indicates that gas will grow more rapidly than any other major energy source given its availability and relatively low carbon profile,” said Tillerson. “We believe gas is the fuel of choice for power generation, producing fewer greenhouse gas emissions than other electrical-generation fuels, such as coal.”
Tillerson’s words about gas mirrored some in an interim report issued on Friday by the Massachusetts Institute of Technology (see related story).
The XTO agreement received regulatory clearance in March. Under the agreement, each outstanding common share of XTO has been converted to 0.7098 shares of ExxonMobil common stock, with cash to be paid instead of any fractional shares.
A conference call to discuss the merger is planned for analysts at 11 EDT on July 8.
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