Takeover of another Oklahoma Company?

[dcsooner]

Exxon Mobil to buy XTO Energy for $31 billion
MARK WILLIAMS,AP Energy Writer Comments 1
Published: December 14, 2009

Exxon Mobil will buy XTO Energy in an all-stock deal worth $31 billion as the oil giant moved aggressively Monday to capitalize on the growing supply of natural gas at home.

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The deal could signal a new rush to own natural gas assets by major integrated producers, and perhaps the start of a significant consolidation in the energy industry.

"Exxon is the group leader and it sets the trend. I would expect more acquisitions in the next three to six months," said Fadel Gheit, senior energy analyst for Oppenheimer. "Who that will be is the $64,000 question."

Exxon is closely watched in the industry and an acquisition like XTO could prompt other companies like Royal Dutch Shell PLC, BP BLC or Chevron Corp. to move.

Potential targets include big natural gas companies like Chesapeake Energy, Devon Energy and Anadarko, Gheit said.

XTO shows the priority that major producers are giving to natural gas as a fuel source. New technology has unlocked trillions of cubic feet of natural gas at home, meaning energy producers do not have to navigate tricky political environments overseas.

That doesn't mean that those projects are being excluded.

Exxon just last week gave the go-ahead for a $15 billion natural gas project in Papua New Guinea, positioning the world's largest publicly traded oil company to provide energy to a fuel-hungry China.

XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight formations known as shale. Shares in the company jumped 16 percent, or $6.64, to $48.13 in early trading.

Shares of Exxon fell 3.5 percent, or $2.51, to $70.32.

Exxon has signaled recently that it was moving increasingly toward landing natural gas assets. Once the deal closes, Exxon said it will establish a new organization to manage global development and production of unconventional resources.

The company, based in Irving, Texas, will issue 0.7098 common shares for each common share of XTO, representing a 25 percent premium to XTO stockholders. Exxon also will assume $10 billion in XTO debt.

The deal values XTO's shares at $51.69, based on the closing price Friday.

"XTO has a proven ability to profitably and consistently grow production and reserves in unconventional resources," Bob Simpson, chairman and founder of XTO, said in a statement.

Simpson is one of the highest paid executives in the United States. His compensation last year was valued at $53.5 million.

He retired as CEO in 2008.


Read more: NewsOK

[Kerry]

This is why having Devon building is so important. It helps keep a company in place if it has significant real estate holdings in a city. Imagine how easy it would be to move Devon if all they had to worry about is a couple of leases that expire every few years. However, having a $billion office building on the books makes it harder to move.

[mugofbeer]

I think the company more in danger of a hostile takeover is Chesapeake. Real estate or not, McClendon doesn't control enough of the company to prevent it. In either case, it would be catastrophic if one of those behemouths came looking here.

[ultimatesooner]

CHK has too much debt to be a takeover target

[Midtowner]

CHK has too much debt to make it very attractive. DVN would very likely resist any sort of acquisition bid. There are much more attractive targets out there.

[mugofbeer]

Its not as tasty a target because of that but it is more vulnerable to it. Neither McClendon or Nichols would agree to a takeover but I believe Devon has far more ability to fight one off than Chesapeake.

[ronronnie1]

CHK has too much debt to be a takeover target

XTO, the company taken over by Exxon, had 10billion in debt. Exxon assumed that debt.

How much debt does CHK have? I wouldn't be shocked if it were bought out.

And XTO's chairman & founder "was one of the heighest paid executives" last year. Bad omen lol.

[Spartan]

I don't think that Chesapeake's debt makes it takeover resistant because KMG had debt. I think though that if CHK can make it without getting taken over while it's stock rebounds and it's spreadsheets do improve (because they will) then that will enable McClendon to get his hands on more stock to prevent a takeover.

Devon is not a takeover risk, too big, too entrenched, etc. You don't just take over a giant like Devon with a 850 ft tall tower, taller than Exxon's in Houston I think. I think that's mostly a perception thing, too. If CHK had invested in a tower instead of a campus they would have the perception of being a giant, too.

[mugofbeer]

Does anyone know the investment CHK has made in their campus vs. the cost of the new Devon tower? I would bet its somewhat comperable overall. In either case, its not a matter of Nichols or McClendon selling out, its a matter of whether or not a suitor with endless pockets like Exxon can be fought off in a hostile takeover.

[RedDirt717]

Reading this was horrifying.

[lasomeday]

With Devon selling off all of the international assets and asset in the Gulf, they are positioning themselves to be an easier target to take over. Devon has been run very conservatively with not as much debt as most oil and gas companies. They have been on takeover lists for many years because of this.

Chesapeake's debt is more than it appears, and their diluted stock is also a risk. So, I don't see Chesapeake being taken over.

XTO purchased a portion of Dominion E&P's assets in 2007. Dominion had 500 employees in Oklahoma with 300 in Oklahoma City. Linn Energy and HighMount purchased two other portions of Dominion's assets with employees in Oklahoma City. They sold the Rockies and South Texas assets to XTO. All of the employees except one in the Oklahoma City office was given severance from XTO.

[mugofbeer]

I think Devon has more control over its destiny than does Chesapeake. No doubt CHK is a less attractive target but its shale properties are extraordinarily valuable - especially at such time as gas gets more expensive.

[progressiveboy]

It certainly would be quite scary for Devon and CHK Energy to be taken over by larger well endowed $$ oil companies. It would certainly be a big test if both companies exited OKC and to see if OKC has truly diversified and would be able to recover from losing 2 Fortune 500 companies. Perhaps this may never happen, but as I mentioned numerous times, does the city have any back up plans to "attempt" to lure new HQ or is this something that our city leaders are not ready to deal with and to be totally dumbfounded if it does occur. Pretty scary thought.

[Spartan]

I think CHK has to be looked at from the perspective of a good investment.

Buy low sell high.

[OUGrad05]

CHK has too much debt to be a takeover target

You should take a look at Exxon's books if you think they have too much debt..Exxon is capable fo acquiring 200+ billion dollar company or companies...they are huge...good news is the federal government wont allow too much of this I dont think...

CHK has too much debt to make it very attractive. DVN would very likely resist any sort of acquisition bid. There are much more attractive targets out there.

Devon would resist a bid, CHK would try...

It certainly would be quite scary for Devon and CHK Energy to be taken over by larger well endowed $$ oil companies. It would certainly be a big test if both companies exited OKC and to see if OKC has truly diversified and would be able to recover from losing 2 Fortune 500 companies. Perhaps this may never happen, but as I mentioned numerous times, does the city have any back up plans to "attempt" to lure new HQ or is this something that our city leaders are not ready to deal with and to be totally dumbfounded if it does occur. Pretty scary thought.

Just becuase a company gets bought doesn't necessarily mean they will leave the state, it may lead to jobs flowing into the state as cost of living is much lower here and employees could enjoy a better life. XOM isn't moving anyone from XTO's fort worth office, in fact they will be creating a new business unit and stationing that unit out of the XTO fort worth offices.

But i hope neither company gets bought out or taken over.

[mugofbeer]

Devon would resist a bid, CHK would try...

Aubrey McClendon's dad started Chesapeake. Aubrey built it to the great company that it is. Its now one of the largest gas producers in the world. McClendon won't want to sell the company - its his baby. The question is, can he fight off Conoco/Phillips or British Pete - or Exxon?

[adaniel]

Aubrey McClendon's dad started Chesapeake. Aubrey built it to the great company that it is. Its now one of the largest gas producers in the world. McClendon won't want to sell the company - its his baby. The question is, can he fight off Conoco/Phillips or British Pete - or Exxon?

I agree, but it may not be his choice. Rather, the stockholders, many of which no nothing about the complexities of the energy business, who are going to be the final decision makers on any sort of merger.

Fortunately, both Devon and CHK have stocks that have been outperforming the big boys for some time, and I think if either would be bought tomorrow it would be heavily resisted. If the price starts sagging, maybe due to stubbornly low oil or gas prices, then I would get concerned.

[jbrown84]

Just becuase a company gets bought doesn't necessarily mean they will leave the state, it may lead to jobs flowing into the state as cost of living is much lower here and employees could enjoy a better life. XOM isn't moving anyone from XTO's fort worth office, in fact they will be creating a new business unit and stationing that unit out of the XTO fort worth offices.

But i hope neither company gets bought out or taken over.

It's one thing for an Irving-based company to not steal jobs from Fort Worth, but they are more likely to do so if it's a company in another state--especially Oklahoma which they so love to look down upon.

But you are right. For example, homegrown company Advanced Academics has stayed put and grown despite being acquired by Chicago-based DeVry a few years ago.

And progressiveboy, you constantly prattle on about OKC luring a Fortune 500 company. It just doesn't work that way, especially for midsize cities. We need to grow our local companies.

Aubrey McClendon's dad started Chesapeake. Aubrey built it to the great company that it is.

I think you have it mixed up. Aubrey started Chesapeake with Tom Ward. Devon was started by Larry Nichols father. Or they founded it together. Something like that. Also, Robert S. Kerr was McClendon's uncle.

[okcpulse]

Whoa, whoa, wait a minute. Educate me. What would stop Aubrey from being able to retain Chesapeake? Is it the shareholders who have a vote? Fancy me.

If this is how the American dream is done, I'll take mine rare. What is the f-ing point of building up a company with so much local influence only so that some big fat-ass corporate giant can come and take it over.

Do me a favor, Houston. Stay out of Oklahoma's business. Go hang another circled Texas star on your house.

[OKCMallen]

It certainly would be quite scary for Devon and CHK Energy to be taken over by larger well endowed $$ oil companies. It would certainly be a big test if both companies exited OKC and to see if OKC has truly diversified and would be able to recover from losing 2 Fortune 500 companies. Perhaps this may never happen, but as I mentioned numerous times, does the city have any back up plans to "attempt" to lure new HQ or is this something that our city leaders are not ready to deal with and to be totally dumbfounded if it does occur. Pretty scary thought.

A test? It would be a massacre. I don't think you're thinking it through...the number of employees both companies have; the level of communtiy involvement, the philanthropic works...massacre. Seriously, i don't think I'm even being dramatic. From skyscrapers to helping get the Thunder to OKC to donations to schools to river improvements....ugh.

that being said, there's nothign to worry about right now. That sentence in that article was complete and utter speculation.

[mugofbeer]

Unfortunately, these things run in packs. One company does something so the competition starts doing it or they feel like they will be left behind. Look for a couple more big buyouts of gas companies. Luckily, there are several others but the damn press articles keep talkign about Devon and Chesapeake as the top ones because of their shale expertise.

[OUGrad05]

Whoa, whoa, wait a minute. Educate me. What would stop Aubrey from being able to retain Chesapeake? Is it the shareholders who have a vote? Fancy me.

If this is how the American dream is done, I'll take mine rare. What is the f-ing point of building up a company with so much local influence only so that some big fat-ass corporate giant can come and take it over.

Do me a favor, Houston. Stay out of Oklahoma's business. Go hang another circled Texas star on your house.

You can build a company any way you want but when you take it public (ie issue stock on a public stock exchange) you sell pieces of the company to other people (shareholders). Once you sell over 50% obviously it is no longer majoirty owned by you. Aubrey has long had less than 50% but lost remaining control this past year when he was forced to sell his stock to cover a margin call. Not the company's fault, not the country's fault, its Aubrey's fault...the american dream is fine, building a business is fine but when you exchange pieces of the business for money you lose some of that control

[Pete]

Does anyone know the investment CHK has made in their campus vs. the cost of the new Devon tower?

Devon is spending $750 million on it's new HQ and for CHK it's almost impossible to total everything up.

They own hundreds of separate properties and many (such as Classen Curve and NH Plaza) are not for the use of their employees. Many more are not being used directly by the company now but may ultimately become part of their campus.

It wouldn't surprise me, though, if CHK has around $750 million invested in various real estate.

[Spartan]

Do me a favor, Houston. Stay out of Oklahoma's business. Go hang another circled Texas star on your house.

This is why cities like OKC, Dallas, and KC take a huge community effort to be successful, whereas cities like Houston or Omaha that are the toast of the white collar business world just take a few corporate decisions continuing to go their way to be successful.

This is also the reason, when you get to the heart of it, that Tulsa is no longer a successful city. For years they just expected corporate decisions to continue to go their way. Then they stopped going their way and Tulsa couldn't make the switch to a community effort kind of city.

[OUGrad05]

This is why cities like OKC, Dallas, and KC take a huge community effort to be successful, whereas cities like Houston or Omaha that are the toast of the white collar business world just take a few corporate decisions continuing to go their way to be successful.

This is also the reason, when you get to the heart of it, that Tulsa is no longer a successful city. For years they just expected corporate decisions to continue to go their way. Then they stopped going their way and Tulsa couldn't make the switch to a community effort kind of city.

Tulsa and the state had a lot to do with driving corporations out...you're exactly right they expected decisions to go their way, they got arrogant, thought they could create an environment not as friendly to business and it backfired and the result was thousands of lost jobs....jobs that are now south of the red river