XTO MergerI like the timing of the merger. Exxon is definitely buying during a time of maximum pessimism for the natural gas business. XTO was also getting to the size where it would be difficult to maintain their past growth rate and was starting to disappoint the market (high for the year was around $80 per XTO share, takeover at $47).
The same situation happened to Renaissance Energy in Canada which was acquired by Husky. Husky did well with the Renaissance assets and I expect Exxon to do very well with the XTO acquisition over time. Post merger, XTO asset and production growth may slow from their historical numbers. Exxon will manage growth, capital and people in ways that will change the XTO corporate culture over time. These assets will become more of a cash cow than a growth platform in the future.
At the current price of $68.22, I rate Exxon shares a strong buy (18 December 2009), with a $65 - $70 target for year end 2009. Dividend is 1.8 %. Very good inflation hedge for those who don't trust governments to limit inflation.