By James Rickman, SVS Today, energy giant Exxon Mobil (NYSE: XOM) announced it will buy XTO Energy (NYSE: XTO), a major natural gas supplier in the all-stock deal worth $41 billion. The signed deal revives hopes of a renewed sentiment towards clean energy domestic natural gas assets by major integrated producers, and perhaps the start of a significant consolidation in the energy industry more in line with that of T. Boone Pickens plan. Most industry analyst speculate more energy sector acquisitions and consolidations from the likes of British Petroleum (NYSE: BP) and Chevron (NYSE: CVX) are set to be announce over the next ten months as the global economy and industrial manufacturing stabilizes with potential takeover targets including Chesapeake Energy, Devon Energy and Anadarko, among others.
This latest XTO Energy purchase by Exxon Mobil shows the priority industry leaders and producers are giving to natural gas as a bridge fuel source. New advanced technology has unlocked trillions of cubic feet of natural gas at home, meaning energy producers do not have to navigate tricky political environments overseas.
Just last week Exxon also accelerated development of the $15 billion natural gas project in Papua New Guinea, now positioning the world's largest publicly traded oil company to provide energy to a fuel-hungry China.
XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight formations known as shale. Shares in the company jumped 16%, or $6.64, to $48.13 in early trading.
Exxon has signaled recently that it was moving increasingly toward landing natural gas assets. Once the deal closes, Exxon reports it will establish a new organization to manage global development and production of unconventional resources.
The company, based in Irving, Texas, will issue 0.7098 common shares for each common share of XTO, representing a 25 percent premium to XTO stockholders. Exxon also will assume $10 billion in XTO debt. The deal values XTO's shares at $51.69, based on the closing price Friday.
Natural gas is much cleaner than coal, diesel, or gasoline. In fact, natural gas is the cleanest fossil fuel and a highly efficient form of energy. The U.S. Energy Information Administration said that natural gas is twice as clean as coal.
American natural gas is abundant. A recent study by the Potential Gas Committee estimated that natural gas reserves have surged by 35 percent. In fact, the 2,074 trillion cubic feet of domestic natural gas reserves cited in the study is the equivalent of nearly 350 billion barrels of oil.
Natural gas has a lower carbon content and fewer impurities than other fuels, and produces less sulfur dioxide (a primary cause of acid rain) and other pollutants. Natural gas produces about 25% less greenhouse gas emissions than diesel- or gasoline-powered vehicles, respectively.
For instance, carbon monoxide (CO) and nitrogen oxides (NOx) are reduced by more than 90 and 60 percent, respectively, and carbon dioxide (CO2), a greenhouse gas, is reduced by 30 to 40 percent. When used in medium- and heavy-duty engines, CO and particulate matter (PM) reductions of over 90 percent, and NOx reductions of over 50 percent, have been demonstrated compared to diesel engines.
Natural gas already has a tremendous advantage, particularly when used for trucks and fleet vehicles. Most trucking today is round trip, one-tank routes. There are approximately 1.5 million miles of gas pipe and distribution lines crisscrossing the country, making natural gas available on nearly every street and community in America today. Building the infrastructure also creates the kinds of jobs we need in the U.S.
More than 70% of US imported oil is used in transportation. Of all of the domestic energy resources available (domestic oil, natural gas, nuclear, coal, wind, solar, hydro, geo-thermal and bio fuels), only natural gas is easily used as a transportation fuel today. It is significantly less expensive than gasoline or diesel with prices in the range of $1.50 per gallon equivalent.
There are more than 10 million vehicles in the world running on natural gas, so this is a well-tested technology. However, only about 130,000 of them are in the U.S. Corporations such as UPS and Waste Management operate a significant fleet of natural gas powered trucks and cities across the country use natural gas in their bus and garbage truck fleets, including Washington, D.C. In Los Angeles alone there are more than 2,800 natural gas buses in operation. Most recently, AT&T announced plans to spend an estimated $350 million to purchase about 8,000 Compressed Natural Gas (CNG) vehicles for its fleet.
About Author
Mr. Rickman is a respected analyst, innovative expert in business content and web development services with over 30-years experience, published worldwide. He is also the author of several books including Eight Billion People. Mr. Rickman holds advanced business and technical degrees from Boston University. For more information visit : http://www.sustainablevirtualbiz.com/ or call (503) 621-4953.
This latest XTO Energy purchase by Exxon Mobil shows the priority industry leaders and producers are giving to natural gas as a bridge fuel source. New advanced technology has unlocked trillions of cubic feet of natural gas at home, meaning energy producers do not have to navigate tricky political environments overseas.
Just last week Exxon also accelerated development of the $15 billion natural gas project in Papua New Guinea, now positioning the world's largest publicly traded oil company to provide energy to a fuel-hungry China.
XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight formations known as shale. Shares in the company jumped 16%, or $6.64, to $48.13 in early trading.
Exxon has signaled recently that it was moving increasingly toward landing natural gas assets. Once the deal closes, Exxon reports it will establish a new organization to manage global development and production of unconventional resources.
The company, based in Irving, Texas, will issue 0.7098 common shares for each common share of XTO, representing a 25 percent premium to XTO stockholders. Exxon also will assume $10 billion in XTO debt. The deal values XTO's shares at $51.69, based on the closing price Friday.
Natural gas is much cleaner than coal, diesel, or gasoline. In fact, natural gas is the cleanest fossil fuel and a highly efficient form of energy. The U.S. Energy Information Administration said that natural gas is twice as clean as coal.
American natural gas is abundant. A recent study by the Potential Gas Committee estimated that natural gas reserves have surged by 35 percent. In fact, the 2,074 trillion cubic feet of domestic natural gas reserves cited in the study is the equivalent of nearly 350 billion barrels of oil.
Natural gas has a lower carbon content and fewer impurities than other fuels, and produces less sulfur dioxide (a primary cause of acid rain) and other pollutants. Natural gas produces about 25% less greenhouse gas emissions than diesel- or gasoline-powered vehicles, respectively.
For instance, carbon monoxide (CO) and nitrogen oxides (NOx) are reduced by more than 90 and 60 percent, respectively, and carbon dioxide (CO2), a greenhouse gas, is reduced by 30 to 40 percent. When used in medium- and heavy-duty engines, CO and particulate matter (PM) reductions of over 90 percent, and NOx reductions of over 50 percent, have been demonstrated compared to diesel engines.
Natural gas already has a tremendous advantage, particularly when used for trucks and fleet vehicles. Most trucking today is round trip, one-tank routes. There are approximately 1.5 million miles of gas pipe and distribution lines crisscrossing the country, making natural gas available on nearly every street and community in America today. Building the infrastructure also creates the kinds of jobs we need in the U.S.
More than 70% of US imported oil is used in transportation. Of all of the domestic energy resources available (domestic oil, natural gas, nuclear, coal, wind, solar, hydro, geo-thermal and bio fuels), only natural gas is easily used as a transportation fuel today. It is significantly less expensive than gasoline or diesel with prices in the range of $1.50 per gallon equivalent.
There are more than 10 million vehicles in the world running on natural gas, so this is a well-tested technology. However, only about 130,000 of them are in the U.S. Corporations such as UPS and Waste Management operate a significant fleet of natural gas powered trucks and cities across the country use natural gas in their bus and garbage truck fleets, including Washington, D.C. In Los Angeles alone there are more than 2,800 natural gas buses in operation. Most recently, AT&T announced plans to spend an estimated $350 million to purchase about 8,000 Compressed Natural Gas (CNG) vehicles for its fleet.
About Author
Mr. Rickman is a respected analyst, innovative expert in business content and web development services with over 30-years experience, published worldwide. He is also the author of several books including Eight Billion People. Mr. Rickman holds advanced business and technical degrees from Boston University. For more information visit : http://www.sustainablevirtualbiz.com/ or call (503) 621-4953.
