2011-06-15-2011-06-09-2011-06-09

Acquired 317,000 acres in PA Marcellus play, gaining 50 MMcf/d, 228 Bcf proved.

ExxonMobil Corp., Irving, Texas, (NYSE: XOM) via subsidiary XTO Energy Inc. has added another 317,000 acres in Pennsylvania's Marcellus shale via acquisitions of privately held companies Phillips Resources Inc., Warrendale, Pa., and TWP Inc., Butler, Pa., for $1.69 billion in cash.

The acquisition, centered in southwestern Pennsylvania, brings ExxonMobil's total Marcellus holdings to 707,000 net acres.

Alan Jeffers, a spokesman for ExxonMobil, says, "We believe the mergers will create significant value by leveraging the regional synergies in upstream operations and acreage holdings between XTO Energy and the Phillips companies."

The assets include 228 billion cubic feet of proved reserves and production of 50 million cubic feet of gas per day.

Analysts at Global Hunter Securities value the acreage at approximately $5,331 per acre and $7.41 per Mcfe for proved reserve. "We do not know the mix of proved developed to undeveloped reserves, so if we assume that the mix is 50/50 and assume the proved reserves are worth about $342 million, it would imply that Exxon paid approximately $4,250 per acre. This looks like a great deal for Exxon."

A year ago, ExxonMobil closed a $41-billion acquisition of XTO, gaining 45 trillion cubic feet of reserves and a foothold in most major shale basins in the U.S. Subsequently via XTO, ExxonMobil has also acquired shale assets in the Haynesville shale from Ellora Energy for $700 million, and in the Fayetteville shale from Petrohawk Energy Corp., Houston, (NYSE: HK) for $650 million.

According to ExxonMobil, the deal closed on June 2. The production and employees of the two firms will be merged into Exxon Mobil's XTO Energy subsidiary, which will manage the assets from XTO's Appalachia division headquartered in western Pennsylvania.

As of the end of the first quarter, ExxonMobil produced 3.9 billion cubic feet of gas per day in the U.S.