Exxon Mobil made a multibillion dollar bet on its vision that natural gas will become a dominant fuel during the next few decades. Tuesday, Chevron made a similar, albeit smaller, wager on a domestic natural gas producer. As Chevron starts to sell its Atlas deal to shareholders, Exxon continues to have trouble convincing its investors it made the right move.
Still, Exxon isn't veering from its long-term strategy of bulking up on U.S. natural gas. In December, the oil company announced plans to buy XTO Energy Inc. of Fort Worth, Texas, making Exxon the largest gas producer in the U.S. This summer, it bought gas producer Ellora Energy Inc. of Boulder, Colo., for $695 million, and opened a terminal along the Gulf Coast to import natural gas from the Middle East.
All the while, the price of natural gas has been falling, and is off 21% since Exxon announced the $25 billion XTO deal. On Tuesday, natural gas futures contract for December settled up 12.2 cents at $4.210 a million British thermal units on the New York Mercantile Exchange. The commodity is trading at low prices after newly developed drilling techniques exploited tight shale gas rock formations during the past decade, creating a glut.
The XTO acquisition lifted Exxon's energy output by nearly 14%, but brought in only about $150 million in net earnings in the third quarter, the first in which Exxon reported financial data that included XTO. That is about 3% of what the company earned from the sale of oil and natural gas during that period......Read the entire article.