Exxon Mobil (XOM) announced today that it’s buying XTO Energy (XTO) for $31 billion. This is a huge deal and it represents a 25% premium for shares of XTO.
XTO is the country’s largest producer of natural gas. Exxon is betting that demand for natural gas will grow as the U.S. government tries to push the county away from coal. This move will probably trigger an “arms race” among major oil stocks so don’t be surprised to see someone respond with a mega-deal of their own. On Wall Street, the rule is “monkey see, monkey do.”
Right now, I’m not a fan of either stock. I have XTO rated as a Sell and Exxon rated as a Strong Sell. One of my favorite energy stocks is Interoil (IOC) which is up over 255% since I first added to our Emerging Growth Buy List in March.