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.