XTO purchase bodes well for Western Slope
ExxonMobil’s acquisition of XTO Energy Inc. in a $41 billion deal strikes a much-needed chord of cheer in what has so far been a dreary winter.
ExxonMobil, the world’s largest energy company, apparently is looking to cement that position with the purchase of XTO and its 45 trillion cubic feet of natural gas.
The purchase seems to bode particularly well for western Colorado because ExxonMobil has continued its active drilling program in the Piceance Basin despite the economic slowdown that has so weighed down the West Slope and Colorado economies. It certainly doesn’t hurt that XTO includes Piceance Basin holdings in its portfolio.
On a larger scale, though, the acquisition suggests that ExxonMobil is buying an overstocked supply at an advantageous price.
Typically, times such as these are periods in which large companies such as ExxonMobil seek to boost their assets by consolidation with competitors, among other techniques. Like individual consumers, they hunt for bargains where bargains are to be had.
ExxonMobil has cash and a long-term and evidently, optimistic view of the future for the energy business.
“Overall, I can’t take it as anything but a good signal for the longer-term prospects of natural gas” in the United States, said Carter Mathies, president of Clover Energy Services LLC in Grand Junction.
Perhaps more important than the immediate economic impact, the move signals that ExxonMobil is betting heavily that the price of natural gas is headed towards an upswing. Perhaps ExxonMobil sees a new demand springing from an economic recovery.
Closer to home, ExxonMobil also seems to be comfortable with the prospect of getting the gas it owns in the Piceance Basin, as well as the new holdings from XTO, to the market without the basis differential that has for so long depressed the price of natural gas from the Rocky Mountain states.
That’s just good news, to XTO stockholders certainly, as well as to the many small concerns in western Colorado that serve the energy business and have been holding on in hopes the economy would claw its way back.
ExxonMobil, a company that does not have a history of betting unwisely, has wagered $41 billion.
We’re hopeful that the rest of the energy industry gets a boost from ExxonMobil’s vote of long-term confidence.