4 In 10 ExxonMobil Exploratory Wells Dry - Purchase Of XTO For $30 Billion Will "Increase Reserves"

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an. 8 (Bloomberg) -- Exxon Mobil Corp. seeks more than added reserves with its takeover of XTO Energy Inc. The biggest U.S. oil company also intends to prevent a repeat of exploration flops such as a Hungarian well that struck more water than gas. Last month’s agreement to buy Fort Worth, Texas-based XTO for $30 billion, Exxon’s largest takeover since its 1999 purchase of Mobil Corp., provides growth potential to a company that’s failing on four in 10 exploration wells, analysts say. Those setbacks culminated in the Nov. 2 abandonment of a $75 million effort to crack open a natural-gas field in Hungary.

XTO knows more than Exxon about tapping petroleum deposits that require unconventional drilling methods, said Gary Adams, a vice chairman at Deloitte LLP in Houston. XTO became the largest U.S. gas producer by exploiting so-called shale and tight-sand deposits while Exxon focused on offshore oil projects, he said.

“Exxon is buying XTO for the people so they can take their knowledge and skill base and put it to work in Hungary as well as Germany and other places,” said Brian Youngberg, an analyst at Edward Jones & Co. “For the large, integrated oil companies, unconventional plays were kind of forgotten for a long time, but now it’s one of the few growth areas.”

Unconventional deposits include tight sands, or sandstone so dense that traditional drilling won’t unleash the gas, and shale, a type of rock with pores so small that fracturing is required to allow fuel to flow. Exxon’s Hungarian prospect involves tight sands like those at the Freestone Trend in Texas, which accounts for 28 percent of XTO’s output.

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