Rex Tillerson, CEO of Exxon Mobil, just slapped the global oil industry upside the head with his $41 billion deal to buy nat gas giant XTO. According to Forbes, while everyone is focused on locking up foreign oil rights and reserves, Exxon is showing us what the path will be over the next few decades in terms of cheaper, easier to access natural gas.
They also included the standard list of similar players to XTO that may also catch a bid in the future:
This acquisition, consisting of $31 billion in Exxon shares and assumption of $10 billion XTO debt, will set off the wave of consolidation we’ve been anticipating all year. Within 18 months you can expect the international supermajors to gobble up all the shale-focused independents.
Top of the shopping list is Devon Energy, which is in the process of selling off all its international assets to focus on higher returning and less capital-intensive U.S. natural gas plays (a month ago, we suggested that Exxon would be a likely buyer of Devon). Petrohawk Energyhas built an impressive position in the Haynesville shale of Louisiana and Texas. Range Resources is a leader in the Marcellus shale centered in Pennsylvania. Chesapeake Energy is in practically every play and has already sold portions of its positions to the likes of BP and Statoil Others targets include EOG Resources, Encana and Anadarko Petroleum.
Forget about the stocks and the trades for a second…I love this move politically and socially for this country. Natural gas is the one resource we have a ton of, we have more than we can even store. If we ever get serious about moving our energy usage over, the job creation and infrastructure build out would be akin to the Industrial Revolution.
Exxon’s making a commitment to the fuel with a deal of this size ought to be a wake up call to congress.