US natural gas futures up after ExxonMobil's XTO acquisition

14 December 2009 22:20  [Source: ICIS news]

HOUSTON (ICIS news)--US natural gas futures were up nearly 17 cents on Monday, pushed higher partly on energy supermajor ExxonMobil's bet on the fuel with a $41bn (€28bn) acquisition of XTO Energy.

January contracts on the NYMEX finished the session at $5.332/MMBtu in response to ExxonMobil's announcement of its all-stock purchase of the natural gas exploration and production company that holds multiple leases in key US shale gas fields.

XTO has properties in what amounts to 45,000bn cubic feet (bcf) of gas in unconventional US patches such as the Barnett shale in Texas, Haynesville shale in Louisiana, Marcellus shale in the northeast and Fayetteville field in Oklahoma, according to the company's website.

"XTO is a leading US unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees," ExxonMobil CEO Rex Tillerman said in statement.

"XTO’s strengths, together with ExxonMobil’s advanced R&D [research and development] and operational capabilities, global scale and financial capacity, should enable development of additional supplies of unconventional oil and gas resources, benefiting consumers both here in the United States and around the world."

ExxonMobil has put its support behind natural gas as an attractive fuel of the future and will create an upstream division to manage global development and production of unconventional resources in XTO's existing offices in Fort Worth, Texas.

Natural gas is an important feedstock and fuel for the US petrochemicals industry.

ExxonMobil will issue 0.7098 common shares for each common share of XTO based on XTO's share price of $41.49 on 11 December.

The deal provides a 25% premium to XTO stockholders, ExxonMobil said, and includes $10bn of existing XTO debt.

($1 = €0.68)

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By: Ryan Hickman
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