Energy stocks vibrant on Exxon/XTO merger
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Oil & Gas | 
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12/14/09By Steve Gelsi
NEW YORK (MarketWatch) – The blockbuster purchase of independent producer XTO Energy by Exxon Mobil touched off big gains in natural gas shares on Monday amid expectations of other deal-making in the sector.
Exxon Mobil (XOM 69.74, -3.09, -4.25%) is paying a 25% premium for XTO Energy (XTO 47.79, +6.30, +15.18%) in an all-stock deal valued at $31 billion plus $10 billion in XTO debt. See full story.
Shares of XTO Energy jumped 16% to $47.96. Exxon Mobil (XOM 69.74, -3.09, -4.25%) dipped 2.5% to $71.04.
It’s the biggest acquisition in the energy business since ConocoPhillips bought Burlington Resources in 2005 for about $36 billion.
Amid merger talk, the NYSE Arca Natural Gas Index (XNG 524.54, +23.59, +4.71%) rose 4% to 521. Besides XTO, the biggest gainers included Chesapeake Energy Corp. (CHK 24.60, +1.57, +6.82%) , up 6%, and Southwestern Energy (SWN 44.53, +3.08, +7.43%) , EOG Resources (EOG 91.14, +5.09, +5.92%) , Devon Energy (DVN 67.29, +3.40, +5.32%) – all up about 5%.
Among other major energy sector gauges, the NYSE Arca Oil Index (XOI 1,052, +3.72, +0.35%) rose 0.8% to 1,057. The Philadelphia Oil Service Index (OSX 188.64, +3.06, +1.65%) rose 1.5% to 188.
Among stocks in the spotlight, Dynegy Inc. (DYN 1.90, -0.07, -3.56%) fell 4% to $1.89. The company said its Dynegy Holdings subsidiary will repurchase about $420 million of its outstanding 6.875% senior unsecured notes due 2011 and about $410 million of its outstanding 8.75% senior unsecured notes due 2012 from a fixed-income investor.
“This transaction will significantly reduce the company’s debt obligations in 2011 and 2012, while also reducing interest payments and eliminating refinancing risks associated with our near-term debt profile,” said Holli Nichols, Dynegy’s chief financial officer. “With reduced near-term debt obligations through 2012, we are better able to weather near-term market uncertainty without a pressing need to access the capital markets.”
Steve Gelsi is a reporter for MarketWatch in New York.
