July 8 (Bloomberg) -- Exxon Mobil Corp., the largest publicly traded company, plans to buy back $3 billion of its shares this quarter, easing the effect on shareholders from its takeover of natural-gas producer XTO Energy Inc., and said it will pay off or refinance the deal’s assumed debt.
The $25 billion purchase last month increased outstanding shares at Irving, Texas-based Exxon Mobil, by 416 million, or about 9 percent, David Rosenthal, vice president for investor relations, said today during a conference call with analysts. The company also will pay off or refinance $11 billion of assumed debt when the opportunity presents, he said.
The deal made Exxon Mobil the largest U.S. producer of clean-burning gas, which Chief Executive Officer Rex Tillerson expects to be the fastest-growing fuel for more than two decades. He kept almost all of XTO’s 3,300 employees and said a team in its former Fort Worth headquarters will spend up to 18 months setting drilling priorities.
“Now that we’ve got this in-house, we want to look at what are the optimization steps that could be taken,” Tillerson said on the call. “We don’t have to be driven by all the aspects that XTO standalone was.”
Exxon Mobil is ending XTO’s practice of locking in oil and gas prices for future production and instead will use its traditional yardstick of return on capital, Tillerson said. At the same time, XTO was more efficient than Exxon Mobil at drilling onshore wells such as those in the Permian Basin of West Texas, Tillerson said.
The XTO purchase is a long-term bet that gas from shale formations, coal seams and other so-called unconventional sources will meet rising U.S. demand through at least 2030 as output from conventional wells declines, Tillerson said.
Exxon Mobil acquired the equivalent of at least 45 trillion cubic feet of recoverable gas beneath 3.34 million U.S. acres with the purchase, along with expertise to evaluate 4.8 million acres of potential fields already accumulated outside the U.S., Tillerson said.
The unconventional assets include oil and gas trapped in dense, hard rock such as shale, considered not worth drilling until Texas oil-patch billionaire George Mitchell developed methods to extract gas economically in the 1990s.
Exxon Mobil rose 38 cents to $58.81 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 14 percent this year.
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