XTO Energy sells
Exxon Mobil today says it will buy XTO Energy, which is a natural gas producer. Exxon Mobil will buy $31 million worth of stock and take over XTO Energy’s $10 million in debt, so the company won’t need to seek debt settlement relief anymore.
The Wall Street Journal says “the deal represents Exxon’s strategy to diversify away from oil and into natural gas, which is considered a cleaner fuel.” It is largely expected that the demand for natural gas will continue to rise.
Not so fast
Exxon Mobil won’t be taking over XTO energy right away; the companies say they expect the deal to close in the second quarter of 2010. This represents the largest energy company merger in years.
Once Exxon Mobil takes over XTO Energy, the company will own about 45 trillion cubic feet of natural gas in the United States.
About the companies
Exxon Mobil formed 10 years ago, when Exxon and Mobil oil companies joined forces. Exxon Mobil is currently the largest publicly traded company by market capitalization.
XTO Energy was founded in 1985 and is the largest U.S. natural gas producer.
“XTO is a leading U.S. unconventional natural gas producer, with an outstanding resource base, strong technical expertise and highly skilled employees,” Rex Tillerson, Exxon’s chief executive, said in a statement.
About natural gas
Natural gas is widely used to produce electricity. Natural gas is used in steam turbines and gas turbines. Burning natural gas to provide heat produces about 30 percent less carbon dioxide than burning petroleum. Natural gas is also used in many stoves and gas-heated clothes dryers.
Natural gas also is used to fuel vehicles. The energy efficiency is pretty close to the same as gasoline engines, but natural gas creates less pollution. Currently, Pakistan, Argentina, Brazil, Iran and India have the most natural gas powered vehicles.
Natural gas also is used in fertilizer production and to fuel certain types of aircraft.
