EXXON'S FAILURE TO TAP UNCONVENTIONAL RESERVES LED TO XTO DEAL - energypedia general news article
Bloomberg reports that ExxonMobil's recent takeover of XTO Energy was about more than just adding reserves. The biggest U.S. oil company also intends to prevent a repeat of exploration flops such as a Hungarian well that struck more water than gas. Last month’s agreement to buy Texas-based XTO for $30 billion, Exxon’s largest takeover since its 1999 purchase of Mobil Corp., provides growth potential to a company that is failing on four in 10 exploration wells, analysts say. Those setbacks culminated in the Nov. 2 abandonment of a $75 million effort to exploit a natural-gas field in Hungary.
XTO knows more than Exxon about tapping petroleum deposits that require unconventional drilling methods, said Gary Adams, a vice chairman at Deloitte in Houston. XTO became the largest U.S. gas producer by exploiting so-called shale and tight-sand deposits while Exxon focused on offshore oil projects, he said. 'Exxon is buying XTO for the people so they can take their knowledge and skill base and put it to work in Hungary as well as Germany and other places,' said Brian Youngberg, an analyst at Edward Jones & Co. 'For the large, integrated oil companies, unconventional plays were kind of forgotten for a long time, but now it’s one of the few growth areas.'
Link to Full Article: http://www.energy-pedia.com/article.aspx?articleid=138512
XTO knows more than Exxon about tapping petroleum deposits that require unconventional drilling methods, said Gary Adams, a vice chairman at Deloitte in Houston. XTO became the largest U.S. gas producer by exploiting so-called shale and tight-sand deposits while Exxon focused on offshore oil projects, he said. 'Exxon is buying XTO for the people so they can take their knowledge and skill base and put it to work in Hungary as well as Germany and other places,' said Brian Youngberg, an analyst at Edward Jones & Co. 'For the large, integrated oil companies, unconventional plays were kind of forgotten for a long time, but now it’s one of the few growth areas.'
Link to Full Article: http://www.energy-pedia.com/article.aspx?articleid=138512
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Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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If the XOM acquisition of XTO is as much about technology as leasehold, does that in part explain the SWEPI syndrome, i.e. a major that despite their advantages can not seem to master drilling and completing a successful HS well.
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Permalink Reply by Les Bamburg on
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Harold, some tight gas sand expertise existed in ExxonMobil from developing assets in the Piceance Basin. They primarily lacked shale gas expertise like many other companies. Only those entities in the Barnett Shale were able to hone those skills.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Do you think that SWEPI sends their employees to the same seminars?
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Permalink Reply by Skip Peel - Mineral Consultant on
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I was afraid of that.
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Permalink Reply by Spring Branch,mineral owner on -
They need to go to classes entitled,"The Fair and Equitable Way to Treat Royalty/Mineral Owners #101", or to the Class entitled " Mineral Owners and Their Unexplainable Desire To Receive Royalty Checks #102" Either class would be a step in the right direction and should be mandatory for their employees.
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Permalink Reply by Skip Peel - Mineral Consultant on
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A secure work environment is a paranoid work environment. And big brother is watching. I guess that's just modern corporate culture.
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Permalink Reply by Les Bamburg on
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Harold, it is odd you say that given some of the top people are from the Mobil side.
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Permalink Reply by Les Bamburg on
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Jay, it must have been 2 years after the merger because otherwise it would have been too expensive.
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Permalink Reply by P.G. on
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Don't see why a company as wealthy as Exxon couldn't just hire the expertise if that was all they were lacking. Sounds like there's probably more to it than what they are telling..
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Permalink Reply by Les Bamburg on
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PG, that type of organization and expertise doesn't exist on the street. Rex himself said it was better to acquire the organization than build from the ground up. His intent is to try to keep the Ft Worth office intact. The 2nd driver is to acquire XTO's US production and reserves.
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Permalink Reply by P.G. on
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How did XTO get that expertise?
Just sounds unusual Exxon couldn't get the same expertise as wealthy as they are.
Perhaps it would be more economical to purchase a division that's already up and running. They do come with a profit potential, ie, secured minerals so the sale may eventually not end up costing them anything I suppose..
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Permalink Reply by Les Bamburg on
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PG, XTO developed that expertise thru their development activity in unconventional gas plays over the last 5-7 years.
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