Exxon Announces $31B Deal To Buy XTO Energy
MELISSA BLOCK, host:
And now to another story about a sum of money far larger than most of us can imagine. Exxon Mobil has placed a huge bet on the future of natural gas production in the U.S. Exxon announced today it is buying XTO Energy in a deal valued at more than $30 billion.
NPR's Jeff Brady reports.
JEFF BRADY: XTO Energy is focused primarily on domestic natural gas reserves in places like Texas, Arkansas, Pennsylvania and Wyoming. It specializes in what are called unconventional reserves - that just means the gas is difficult to get out of the ground. Often drillers have to use a process called hydraulic fracturing. Here's Exxon Chairman and CEO Rex Tillerson speaking to financial analysts today.
Mr. REX TILLERSON (Chairman and CEO, Exxon): In our most recent energy outlook, we have illustrated the very strong growth in natural gas demand that we anticipate to occur over the next several decades, certainly at a much higher rate of demand growth than oil or coal.
BRADY: Statements like that are a change for those staid and massive Exxon Mobil, according to Carolyn Davis. She is a senior editor for Natural Gas Intelligence and says the gas industry has largely been left to smaller companies.
Ms. CAROLYN DAVIS (Senior Editor, Natural Gas Intelligence): Natural gas has always kind of been the stepchild, you know. I mean, it's just - it's what we use to heat our houses, you know, what we use to cook with. We don't really think about it as a transportation fuel.
BRADY: While Exxon and others focused on oil, those smaller companies grew and have seen periods of substantial profits. Add to that, concern over climate change and the fact that natural gas burns cleaner than oil and coal.
Ms. DAVIS: The other big oil majors had got to be looking at what Exxon did today and thinking, gosh, we have to get on the bandwagon, too.
BRADY: That seems even more likely when you consider that natural gas prices are in a low period now, and some of the companies that produce gas are trading at about half the stock price they were 18 months ago.
Jeff Brady, NPR News.