Exxon-Mobil, the largest U.S. natural-gas producer, paid $1.69 billion for two closely held energy explorers to gain shale-gas reserves in Pennsylvania and neighboring states. Exxon completed the purchases of Phillips Resources Inc., based in Warrendale and TWP Inc. of Butler on June 2. The 200 employees at the two companies may be retained, it was reported.
Exxon paid $34.9 billion for XTO Energy last year, making it the biggest U.S. gas producer. The acquisition of Phillips Resources and TWP gives Exxon access to 317,000 acres in the Marcellus Shale, a gas-rich geological formation that stretches beneath several eastern states including New York, Pennsylvania and West Virginia.
Shale formations have the potential to more than double the world’s gas reserves, the U.S. Energy Information Agency said in an April 5 assessment. The U.S. has an estimated 827 trillion cubic feet of shale gas and it may account for 47 percent of the nation’s production of the fuel by 2035. Acquisitions in the shale industry are expected to continue, with “vulnerable smaller guys being taken out” as they face higher costs and increased regulation.
U.S. gas futures however have lost 69 percent of their value since peaking at $15.78 per million British thermal units in December 2005, amid a excess of supply primarily from shale formations in Texas, Louisiana and Arkansas. The New York-traded futures closed at $4.85 per million Btu this week.
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