Sold XTO Energy today after holding for one year. It is being bought out by ExxonMobil at a price not far from the current price. Returned a very nice 52% profit for me. And this was my 2nd stock to be bought out from me in last year.
Big News of the Week: Exxon agreed to buy our holding XTO Energy (XTO) in an all-stock deal at a 25 percent premium to Monday’s opening price (a 57% gain for us so far).
The deal announced Monday was also the largest for the U.S. energy sector in at least four years and Exxon’s biggest acquisition since it bought Mobil Corp. for $75 billion in 1999.
XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight shale formations. Technology developed over the past decade has made it much cheaper to pull natural gas from those formations. Already on Monday, energy experts were laying odds as to which natural gas companies would be sold next, and which major oil companies might follow Exxon’s lead by snapping them up. “Exxon is the group leader, and it sets the trend. I would expect more acquisitions in the next three to six months,” said Fadel Gheit, senior energy analyst for Oppenheimer.
Exxon, based in Irving, Texas, will issue about 0.7 shares of common stock for each common share of XTO, a 25 percent premium to XTO stockholders. Exxon will also assume $10 billion in XTO debt. The deal values XTO’s shares at $51.69, based on the closing price Friday. XTO shares rose $6.11, or 15 percent, to $47.60 in trading Monday. Exxon shares fell $3.41 to $69.42.
Word is that other natural gas E&P companies such as Devon Energy ( DVN ), Chesapeake Energy ( CHK ) and EOG Resources ( EOG ) could be potential targets. Hey, ain’t that EOG also in our portfolio? Why yes it is!
I will be analyzing whether I want to become an Exxon shareholder, or sell out now at a very nice profit. Tough decision.
Quick Note: The ‘Current Portfolio’ spreadsheet has been buggy for about a week, not showing up-to-date quotes. I need to look into why that is and I’ll get it back up asap.
Carnival Cruise Lines (CCL): I’ve been hesitant on this purchase from the get-go, as it doesn’t fit within my bias toward higher inflation/oil prices eating into Carnival’s profits. I’m glad to see this week John Rogers of the Ariel Fund mention CCL as a bargain in this article.
Pfizer (PFE): Pfizer ends up on the winning side in the healthcare reform bill.
XTO Energy (XTO): Boone Pickens predicts $100 oil next year, adding XTO to his portfolio. We’re with you Boone!
DISH Network (DISH): The 10% drop in stock price Nov. 20th simply reflected the recently announced 2$ per share special dividend, payable to investors on Dec. 2nd. Nice to invest in stocks that generate cash.