Wednesday, April 24, 2013

Exxon Mobil Looks to Favorable Future With Natural Gas

With the $41 billion acquisition of XTO Energy back in 2010, Exxon Mobil (XOM-$89.43) overnight became the largest producer of natural gas in North America, catapulting beyond erstwhile leader Chesapeake Energy (CHK-$19.29) and other big players, like ConocoPhillips (COP-$58.26), Southwestern Energy (SWN-$34.97) and Anadarko (APC-$83.32). In 2012, proved reserves and production totaled 14.47 trillion cubic feet equivalent (Tcfe) and 3.82 billion cubic feet daily, respectively, up from 7.47 Tcfe and 1.27 billion cubic feet daily in 2009.

In hindsight – at least on paper – the all-stock transaction still looks terrible. Though most deals are liquid rich these days, metrics for natural gas assets purchased in the past year show that the $2.89 per thousand cubic feet equivalent (Mcfe) of proven reserves paid by Exxon for XTO assets is more than double that of current deals.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

No comments: