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XTO Energy Buys Oil Fields From Exxon Mobil for $215 Million

Posted on: Wednesday, 6 July 2005, 15:01 CDT

Jul. 6--FORT WORTH -- XTO Energy of Fort Worth added to its Permian Basin oil properties Tuesday, spending $215 million to buy several fields in Crane, Glasscock and Ector counties and in eastern New Mexico from Exxon Mobil Corp.

The deal is XTO's second purchase of older Exxon Mobil fields. Last year, XTO paid $342 million for properties in the Permian Basin in Gaines and Yoakum counties.

XTO will try to double the field's production of 2,400 barrels per day by refracturing and reacidizing, as well as by new water-flooding and liquid-carbon-dioxide injections.

XTO said it hoped to increase production by 25 percent during the next two years. The fields have proved reserves of 21 million barrels of oil.

"This transaction highlights our ongoing focus in acquiring specific properties in regions where XTO has experience and a history of increasing production and reserves," said Bob Simpson, XTO's chairman.

The sale by Exxon Mobil is part of the multinational's strategy to withdraw from older fields in the United States in favor of newer plays overseas.

"Producing properties in Texas tend to be older and more costly to produce," Exxon Mobil President Rex Tillerson said at the company's annual meeting in May. "In many cases, buyers can produce them more profitably, and it becomes prudent for us to get value for our shareholders by selling."

That strategy has cost Exxon Mobil its long-standing position as Texas' largest producer. In 1994, Exxon and Mobil, then separate companies, together produced 55 million barrels of oil, leading second-place Amoco Production by 10 million barrels.

In 2004, Exxon Mobil was the No. 4 crude oil producer in Texas, with 13.4 million barrels.

But the decline hasn't hurt its stock price. Both companies saw rises after the announcement. XTO was up $1.50, closing Tuesday at $36.73, a 52-week high. Exxon Mobil closed at $60.14, up $1.83.

The Permian Basin properties represent a shift in emphasis for XTO, which during the 1990s built a strong natural gas franchise in East Texas and Louisiana, as well as in the Plains states and New Mexico. In Texas, XTO was the state's third-largest natural gas producer and the ninth-largest oil producer in 2004.

The Permian Basin fields acquired Tuesday include the Vacuum Field in Lea County, N.M., and the Cordona Lake Field in Crane County, Texas. Other fields in the package include the Goldsmith in Ector County, the St. Lawrence in Glasscock County, and the Blanco in Rio Arriba County, N.M.

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Copyright (c) 2005, Fort Worth Star-Telegram, Texas

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XTO, XOM,

Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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