Exxon buys natural gas firm XTO in $41bn deal

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The Independent Online

The oil giant ExxonMobil placed a $41bn (£25bn) bet on the future of natural gas with the acquisition of Texas-based XTO, putting pressure on its rivals to follow suit.

Major oil companies have been expanding their natural gas operations in the expectation that environmental regulation could force a shift from oil to more clean-burning fuels. XTO has operations across the US and is a specialist in extracting gas from unconventional places such as shale rock.

The deal is the biggest in the US energy sector since Chevron bought Texaco in 2000, and experts said other multinational oil firms were likely to consider acquisitions of their own.

"This is a historic deal that marks a dramatic shift on the part of the premier major integrated firm to bet large on US unconventional gas," said Eric Chenoweth, an analyst at Morningstar.

"Other major integrated firms, both European and domestic, have shown greater interest in unconventional gas over the past year, but this has often involved smaller partnerships. Exxon has brought out its cannons where others have been using small arms."

Exxon paid a 25 per cent premium over XTO's share price on Friday, valuing the equity at $31bn. It will also assume $10bn of the company's debt.