Purchase gives Exxon access to XTO's reserves of nearly 45 trillion cubic feet of gas
In an effort to enhance its position in the development of unconventional natural gas and oil resources, Exxon Mobil Corp. has agreed to buy XTO Energy Inc. in an all stock transaction valued at $41 billion, including $10 billion of existing XTO debt.
ExxonMobil has agreed to issue 0.7098 common shares for each common share of XTO, representing a 25% premium to XTO stockholders.
“We are pleased that ExxonMobil and XTO have reached this agreement,” said Rex W. Tillerson, chairman and CEO of Exxon Mobil Corp.
“XTO is a leading US unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees," he continued.
XTO’s resource base is the equivalent of 45 trillion cubic feet of gas and includes shale gas, tight gas, coal bed methane and shale oil. These will complement ExxonMobil’s holdings in the United States, Canada, Germany, Poland, Hungary and Argentina.
The 45 tcfe of resource potential includes 13.9 in proved reserves, 14.2 in low risk upside and 17.0 tcfe of additional potential. XTO puts its resource potential at growth above 30% since 2007 and 20% CAGR growth since 1993. Most of the growth has been through acquisitions as the company made over $11 billion of acquisitions in 2008.
After closing, ExxonMobil plans to establish a new upstream organization to manage global development and production of unconventional resources. This new organization will be housed in XTO’s current headquarters in Fort Worth, Tex.
Bob R. Simpson, chairman and founder of XTO commented, “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.”
Largest producers
The August issue of Oil & Gas Financial Journal showed both ExxonMobil and XTO astop performers, as usual.
Exxon Mobil was the leader in four of the five categories highlighted – assets, revenue, income, and stockholder equity. XTO Energy, which showed a 9.3% revenue gain ($200 million), was the biggest gainer of the group and moved from 11th place to 8th place in the revenue rankings.
The transaction is expected to be complete in 2Q10. JP Morgan Securities Inc. is acting as financial advisor to ExxonMobil and Barclays Capital Inc. and Jefferies & Co. Inc. are acting as financial advisors to XTO.
Analysis
Based on Madison Williams’ (formerly SMH Capital) year-end proved reserve estimate of 15.3 Tcfe and 4Q09 production estimate of 2.9 bcfepd, basic metrics are $2.69 per proved Mcfe and $14,099 per flowing Mcfe.
Dahlman Rose & Co. points out that XTO has “significant exposure to all major unconventional plays,” with shale gas comprising 30% of XTO daily gas production, and tight gas is 45% of daily gas production.
The firm sees the transaction as a positive. XTO provides ExxonMobil with both the unconventional resource expertise and a long term inventory of unconventional potential. ExxonMobil can leverage XTO’s unconventional expertise in the US and apply its techniques to ExxonMobil’s global assets.
Dahlman Rose notes the take out multiples have positive implications for XTO peers and other independents that have the experience and technology to operate unconventional assets. The acquisition is occurring at just under $3/Mcfe, $13,265/mcfepd, and 7.2x EV/2010 EBITDAX, while Dahlman’s group is at $3.26/Mcfe, $17,611/mcfepd, and 8.7x EV/EBITDA.
Source: http://www.ogfj.com
__________________________________________________________________________________
Posts
No comments:
Post a Comment