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Vol. 20, No. 23 Week of June 07, 2015
Providing coverage of Bakken oil and gas

Cross Timbers to XTO

Petroleum News Bakken takes an in depth look at Exxon Mobil Corp. subsidiary

Mike Ellerd

Petroleum News Bakken

As U.S. oil producers cut capital expenditure budgets and scale back operations in response to a stressed global crude oil market, ExxonMobil imposed one of the smallest overall 2015 capex reductions among U.S. oil producers, which is reflected in the activity of its subsidiary XTO Energy which has held steady if not actually increased in recent months.

As Petroleum News Bakken previously reported, ExxonMobil Chairman and CEO Rex Tillerson told industry analysts in March that he expects XTO’s average 2015 rig count to be close to the 13 rigs the subsidiary averaged in 2014. Tillerson also said XTO put 144 new Bakken wells on production and increased net Bakken production by 34 percent.

In April, XTO filed applications with the North Dakota Industrial Commission seeking authorization to drill as many as 610 wells on 73 drill spacing units in Williams and McKenzie counties, by far the largest number of wells requested by any Bakken operator in 2015. Also in April, XTO filed applications seeking the creation of four new DSUs, leading all requests in April. However, XTO also led in DSU requests in March when it asked for 10, and in February at 29. And while not leading in applications in January, XTO requested the creation of 14 DSUs that month.

At a time when upstream activity in the Bakken ― as well as across the U.S. ― has been slowing down, XTO appears to be bucking the trend, and Petroleum News Bakken decided to take a closer look at XTO Energy to learn more about the U.S. Williston Basin’s fourth largest Bakken oil producer. The first of two parts will look at XTO’s history from its beginnings in the 1990s to its growth to become the largest natural gas producer in the U.S. and its eventual merger with ExxonMobil. In part two, which will appear in the June 21 edition, XTO’s Bakken operations, including production growth, technological advances and cost efficiencies will be covered.

XTO’s beginnings

XTO dates back to 1986 when it was founded as privately held Cross Timbers Oil in Fort Worth, Texas, to acquire and develop both oil and natural gas assets. In 1993 the company went public, and three years later changed its strategy from an approximately even balance between oil and gas to focus more on natural gas. In 2001 Cross Timbers Oil simplified its name to XTO Energy based on its stock symbol.

In the early 2000s, XTO continued to grow acquiring and developing more natural gas assets and in 2004 began a move into unconventional assets in U.S. shale basins and progressively into more unconventional domestic gas assets while maintaining some oil production in its portfolio through the 2000s. In 2002, XTO acquired coal bed methane assets in Colorado from J.M Huber Corp. and in 2003 picked up natural gas and coal bed methane assets in the San Juan basin of Colorado and New Mexico from Markwest Hydrocarbon Inc. In that same year the company picked up additional gas assets in the Raton Basin of Colorado and the Hugoton field in Kansas. In 2004 XTO acquired gas and oil properties in seven states from ChevronTexaco Corp., and in 2005 the company acquired Barnett shale producer Antero Resources. Also in 2005, XTO picked up properties in the Permian Basin in West Texas and New Mexico from ExxonMobil.

In 2006 XTO further expanded its footprint in the Barnett shale by acquiring Peak Energy Resources, and moved into East Texas and Mississippi by acquiring assets in those areas from Total E&P USA. In 2007 XTO acquired Rocky Mountain, San Juan and South Texas properties from Dominion Resources.

Bakken entrance

XTO made two acquisitions in 2008 giving it a solid position in the Bakken play. The first was the acquisition of Headington Oil Co. in a $1.85 billion deal and the second was the acquisition of Hunt Petroleum Corp. for $4.2 billion. In the Headington deal, XTO picked up approximately 352,000 net Bakken acres in North Dakota and Montana. “With this acquisition in the Bakken Shale, our Company is now established as a leading producer and leasehold owner in this emerging oil shale play,” said then Chairman and CEO Bob R. Simpson of the deal.

The other Bakken deal was XTO’s 2008 acquisition of Hunt Petroleum Corp. whose assets were concentrated in Texas and Louisiana. The deal also included 15,000 net Bakken acres in North Dakota.

ExxonMobil merger

In 2009 as horizontal drilling and hydraulic fracturing were revolutionizing U.S. oil and gas exploration and production, XTO and global supermajor Exxon Mobil Corp. agreed to a merger in which XTO became a wholly owned subsidiary of ExxonMobil in a deal valued at $41 billion ― the largest natural gas merger in history. The transaction, which closed in 2010, increased ExxonMobil’s resource base by an estimated 10 percent, enhancing ExxonMobil’s position “in the development of unconventional natural gas and oil resources,” ExxonMobil said of the merger. XTO said the merger “teamed XTO’s expertise and experience in the natural gas business with ExxonMobil’s cutting-edge technologies, financial strength and historic leadership in the global energy industry.”

XTO today

Today XTO holds approximately 531,000 Bakken acres in eight western North Dakota counties and 314,000 Bakken acres in Richland and Roosevelt counties in eastern Montana.

But the Bakken is just a portion of XTO’s current portfolio. The company has gas producing operations in Arkansas, Kansas, Wyoming, Colorado, New York, Pennsylvania and West Virginia. In Texas, Oklahoma, Louisiana, Alaska as well as Alberta XTO produces both gas and oil.

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