Exxon Mobil (XOM) has agreed to buy domestic natural gas co. XTO Energy (XTO) in an all-stock deal worth $41 billion as the oil giant moved aggressively Monday to increase its presence in North America’s fast-growing natural gas industry through a major acquisition, and capitalize on the growing supply of natural gas at home.
The deal, which is subject to shareholder approval and regulatory clearance, will “enhance Exxon Mobil’s position in the development of unconventional natural gas and oil resources,” Exxon Mobil said in a statement.
In the deal announced today, valued at $31 billion plus about $10 billion in XTO Energy debt, XTO holders will get 0.7098 share of Exxon for each share of XTO. That values the XTO’s stock at $51.69, representing a premium of about 25% to Friday’s closing price.
Following the transaction closing, Exxon plans to create a new upstream operation to manage global development and production of unconventional resources in order to increase and maximize resource value. The operation will be based in Fort Worth, where XTO has its headquarters. XTO, which claims about 45 trillion cubic feet of gas, will merge its U.S. gas holdings with some unconventional gas properties Exxon has acquired on a smaller scale in the past couple of years in British Columbia, Germany, Poland, Hungary and Germany.
“XTO’s strengths, together with ExxonMobil’s advanced research and development, and operational capabilities, global scale and financial capacity, should enable development of additional supplies of unconventional oil and gas resources,” said Rex Tillerson, Exxon’s chairman and CEO.
Completion of the transaction is expected in the second quarter of 2010.
Exxon, the world’s biggest publicly listed oil company, hasn’t had a major acquisition since the merger a decade ago with Mobil.