Exxon Mobil Confirms Dominance of Fossil Fuels with $31B XTO Acquisition
Today Exxon Mobil announced this year’s largest energy deal with its acquisition of XTO Energy, a domestic developer of natural gas, in an all-stock deal valued at $31 billion.
Wit the acquisition Exxon bolsters its natural gas reserves and it also confirms the company’s belief that fossil fuels are set to dominate over the long-term.
Exxon (CEO Rex Tillerson is #5 in our November Top Ten Players in Green Energy ranking) and its competitors have invested in clean energy. However, they’ve also maintained that a carbon-free world is not likely.
There has been a shift lately in what fossil fuel would likely dominate. Clean coal was recently marketed by fossil fuel advocates as a clean energy alternative. But backlash and negative media reports that clean coal was too expensive and not likely to ever happen, has shifted the focus to natural gas, which emits half of the CO2 emissions of coal. Fueling that interest are growing reserves thanks to the development of large shale plays in the Northeast, Wisconsin, Texas, and Colorado. Natural gas is considered as a potential “bridge fuel” on the way to a carbon-free economy.
With the acquisition, which includes $10 billion of existing XTO debt, Exxon gets its hand on the equivalent of 45 trillion cubic feet of gas, including shale gas, tight gas, coal bed methane and shale oil.
Under the terms of the deal, Exxon will pay XTO shareholders 0.7098 common shares for each XTO share, representing a 25 percent premium for XTO’s shares based on XTO’s Friday’s closing prices.
