An Agreement is Announced Between Exxon Mobil Corporation and XTO Energy Inc

Exxon Mobil Corporation and XTO Energy Inc. announced today, December 14, 2009, an all-stock transaction valued at $41 billion.

Stockholders have to approve and there has to be clearances through the regulatory board. ExxonMobil believes that this will give them a larger step up in developing natural gas and oil resources perhaps in unconventional ways.

ExxonMobil has agreed to issue 0.7098 common shares for each common share of XTO. This represents a 25 % percent premium to XTO stockholders. The transaction value includes $10 billion of existing XTO debt and is based on the closing share prices of ExxonMobil and XTO on December 11, 2009. "We are pleased that ExxonMobil and XTO have reached this agreement," said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation. XTO is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees. XTO's strengths, together with ExxonMobil's advanced R&D 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." source

ExxonMobil is hoping to develop unconventional resources allowing quick development and action of technologies and practices that they hope will increase production. Their new organization will be located where XTO's current offices are, in Fort Worth, Texas.

This should begin in the second quarter of 2010. J.P. Morgan Securities Inc. are acting as financial advisors to ExxonMobil and Barclays Capital Inc. and Jefferies & Company Inc.are the financial advisors to XTO.

Bob R. Simpson, chairman and founder of XTO, said that over the company's 23-year history, XTO has developed technical expertise and has assembled a substantial, high-quality and diverse resource base in producing basins across the United States. "XTO has a proven ability to profitably and consistently grow production and reserves in unconventional resources," said Simpson. "As the world's leading energy company, ExxonMobil will build on our success and open new opportunities for the development of natural gas and oil resources on a global basis." source

This is part of an ongoing evaluation of investment opportunities that these mega companies think will be helfpul to their shareholders and more importantly (I say.) may/should help meet long-term global energy demand growth.

You may hold stock in these companies. If you do or don't what do you think of this? Do you think it will help the demand on global energy? Do you think it is "just" a business deal?

Souces

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