Rex Tillerson has some regrets about Exxon Mobil Corp.’s $31 billion purchase of XTO Energy Inc.
“We probably paid too much,” Tillerson, who served as chief executive officer of the company during the deal, said Wednesday at a conference in Houston sponsored by KPMG LLP. “At the time we were looking at gas prices, I think the general consensus was we’d stay around $5, maybe $6. Of course, it never saw those numbers again.”
Tillerson, who left Exxon to run the U.S. State Department under the Trump administration, defended what XTO has contributed to Exxon since the acquisition, which marked the super major’s entry into shale after decades of pursuing conventional resources overseas. He said he was “proud” of the purchase for the new operational techniques it brought to Exxon and of the more than $300 billion returned to shareholders during his tenure, despite XTO’s price tag.
The deal, announced in December 2009 and completed in mid-2010, was a massive bet on natural gas from shale rock in the biggest acquisition of Tillerson’s tenure and the second-largest in the Irving, Texas-based company’s history. It later became evident that the true riches from shale were to come from oil.
Gas prices reached more than $13 per million British thermal units in 2008, before crashing to less than $3 in 2009. Prices averaged more than $5 the month the deal was announced, but a surplus of shale production has kept gas prices at about $3 or less for most of the past five years.
At a May 2013 shareholder meeting, Tillerson conceded that the company may have been off a year or two on the XTO purchase because gas prices stayed low much longer than it had anticipated. His comments Wednesday were the most direct admission the company has made on the deal.
“I’m proud of the deal. I wish I’d got it for less money,” Tillerson said in Houston. “The shareholders would have been better off. ”