Exxon Closes $2.6B Celtic Deal - Analyst Blog
March 04 2013 - 6:50AM
Zacks
ExxonMobil Canada − the Canadian
unit of ExxonMobil Corporation (XOM) has finally
completed the acquisition of Calgary-based oil and gas driller
Celtic Exploration Ltd. in a deal valued at C$2.59 billion ($2.63
billion).
ExxonMobil’s proposal to purchase Celtic in Oct 2012 received
consent from the Canadian government towards the end of Feb 2013.
The deal was valued at C$3.1 billion after taking into
consideration Celtic's convertible debentures, and bank debt and
working capital obligations.
The acquisition is a move towards expanding ExxonMobil’s footprint
in the unconventional energy plays in North America. The closure of
the deal entails delisting of Celtic shares from the Toronto Stock
Exchange.
Celtic’s output and proved reserves are heavily weighted towards
natural gas. Despite the collapse in natural gas prices, ExxonMobil
expects unconventional gas to play a dominant role in future
supplies, owing to the rapid decline in conventional
production.
With the XTO Energy Inc. acquisition, ExxonMobil gained access to
significant unconventional resources with a major handle on North
America's newest energy discoveries. The Celtic deal is the biggest
opportunity since then and will help ExxonMobil to expand its
presence in the world’s largest energy market.
The company’s efforts to build an unconventional resource portfolio
both in North America and overseas are aimed at increasing
production through increased exposure to large energy resources
with a long reserve life and low field declines. Since the XTO
acquisition, the company possesses more than 1.4 million
unconventional acres in the U.S. and Canada.
In a separate deal, ExxonMobil’s subsidiary Imperial Oil Ltd.
purchased a 50% working interest in Celtic following the completion
of the transaction. The technical expertise and financial strength
of Imperial, ExxonMobil and XTO will expedite the development of
energy in the acquired unconventional, liquids rich acreage.
ExxonMobil holds a Zacks Rank #3, which is equivalent to a
short-term Hold rating. However, there are other stocks in the oil
and gas sector – Enerplus Corporation (ERF),
Range Resources Corporation (RRC) and NGL
Energy Partners LP (NGL) – which hold a Zacks Rank #1
(Strong Buy) and are expected to perform better.
ENERPLUS CORP (ERF): Free Stock Analysis Report
NGL ENERGY PART (NGL): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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