XTO Deal

Exxon Mobil said Monday it will buy natural gas producer XTO Energy Inc. for $41 billion in a stock and debt transaction.


The world's largest publicly traded oil company agreed to issue 0.7098 common stock share for each common share of XTO (XTO, Fortune 500), representing a 25% premium to XTO stockholders.

But some of the shale is near major population centers, and residents near the drilling are worried about air and, especially, water pollution from the chemicals used to extract shale gas.

It is imperative that Exxon will continue to drill these areas even though they are hazardous to the public living near the drilling spots. Nonetheless, I postulate that Exxon will never make any precarious moves when it comes to the lives of the public.

Besides, the rocks are located way, way deep down below so there is a very low chance that the water the public consumes will actually be contaminated by the drilling process.

Perhaps, on the part of air pollution, it is inevitable. You too experience air pollution as you walk by a car that drove past you. People have been living with it for so long already.

You might argue that this excess discharge of toxic gases is actually rather significant as compared to the air pollution in the city. That is true to a certain extent but once again, I trust that Exxon will deal with that by installing air purifier to reduce the damage it will bring to the environment in the future.

Exxon is so concerned about a change in the law it has a clause with XTO that allows it to walk away from the deal if Congress bans hydraulic fracturing or makes it prohibitively expensive, according to filings with the Securities and Exchange Commision. Exxon declined to comment for this story.

To make a pact with XTO on this issue is definitely an impressive contingency plan from my point of view. I bet Exxon has long predicted that this acquisition will definitely draw a lot of unnecessary attention that is once obscure in the past.

In the past, people are quite oblivious to natural gases extraction and hydraulic fracturing. But not anymore as far as I'm concerned. Now that the leading oil company has made such a brobdingnagian move, not only will the industries be watching, the public will also be scrutinizing their every actions.

The key here is to manage the pollutions well and Exxon will be fine. Not forgetting that Copenhagen is just over, Exxon had better watch where they set their foot on.

Credits -cnn, -businessweek, -raztec