Exxon Mobil Corp., the world's largest energy company by market value, agreed to pay about $2 billion in cash and assets to expand in the U.S. Bakken Shale after efforts to exploit overseas shale fields foundered.
Exxon will acquire drilling rights on 196,000 net acres in North Dakota and Montana from Denbury Resources Inc. for $1.6 billion in cash and the exchange of two fields. The agreement will boost Exxon's holdings in the region by about 50 percent, Irving, Texas-based Exxon said in a statement late Thursday. .
The acquisition, Exxon's largest since its $35 billion purchase of XTO Energy in 2010, follows the company's unsuccessful effort to transfer intensive drilling techniques that revived U.S. oil and natural-gas output to similar geologic formations in Poland. The deal also adds crude to Exxon's portfolio as cratering domestic gas prices hurt profits from fields amassed in the XTO transaction.
"XTO was a natural-gas deal and given what's happened to gas prices since then it really was incumbent on Exxon to get more involved in oil plays," Allen Good, an analyst at Morningstar Investment Services in Chicago, said in an interview today.
Gas prices reached a 10-year low in April on the New York Mercantile Exchange. Surging Bakken output has made North Dakota the largest oil-producing state behind Texas, according to the Energy Department in Washington.
The combined value of the cash and oil fields in Texas and the Rocky Mountains that Exxon will exchange for the Bakken assets approaches $2 billion, Denbury Chief Executive Officer Phil Rykhoek said during a conference call with analysts. Alan Jeffers, an Exxon spokesman, declined to comment on Denbury's valuation estimate.
Exxon said separately today that it plans to surrender two of its six shale-drilling licenses to the Polish government after deciding in June to quit the country.
In the U.S., Bakken crude production has tripled in four years to reach a record 610,000 barrels a day in the third quarter, according to Bloomberg Industries data.
