Exxon's buyout of XTO Energy, a dramatic move announced earlier this week, is the former company's biggest financial action since merging with Mobil in 1999. It builds even greater credibility than previously held for Marcellus shale development. Two things are particularly notable about this acquisition. While Exxon has been a large player in shale gas in other areas, to date it has held only a relatively small leasehold of 20,000 acres in the Marcellus shale formation centered on a couple of northeastern Pennsylvania counties.

XTO, through its buyout of Linn Energy's assets last year, became beneficiary to Linn's 142,000 acre Marcellus shale leasehold amassed in western Pennsylvania and West Virginia. XTO had also been very active leasing land in Broome and Delaware counties in New York's Southern Tier paying $110 million in one transaction for 46,000 acres along the west branch of the Delaware River near the village of Deposit.

Exxon, the largest publicly-traded international oil and gas company in the world, by purchasing XTO has also become one of the largest leaseholders in the Marcellus shale formation.

A second notable aspect of this acquisition is that XTO is known for its shale gas expertise and particularly its high-tech approach. Historically, XTO itself has grown more through acquisition and less through leasing activities. It calls this strategy "technical-geoscience-operational arbitrage" taking advantage of its knowledge-based approach to develop reserves obtained through acquisitions that other companies have failed to fully actualize. Buying XTO positions Exxon for the long haul as a shale gas heavy-hitter even more so than it already is.

This move is as much on the world chess-playing board as the one for the northeastern U.S. since Exxon also controls a huge swath of drilling rights in eastern Europe stretching from Poland and Hungary to Germany. It probably hopes to use XTO's shale gas expertise to help develop this acreage too.

However, underscoring the strategic significance of developing the Marcellus shale formation as one key aspect of the Eastern Seaboard's future energy independence, the Exxon-XTO merger document contains the specific escape clause that should Congress ever regulate hydro-fracturing (aka fracing) making it “illegal or commercially impracticable,” Exxon may rescind its offer to purchase of XTO.

===Read More===

-Frack Attack: Will Congress Kill the Exxon-XTO merger by Russell Gold

-Exxon's XTO Buy Is A Direct Affront To The Russians by Joe Weisenthal