IRVING, Texas (
surprise acquisition of
is expected to set off a wave of mergers and acquisitions in the energy sector, and some of the likely targets have been bid up in recent trading.
The Exxon-XTO deal caught analysts by surprise -- though the logic behind the deal didn't -- and now that same logic suggests that the high-wattage players in the energy market are going to be looking to one-up, or at least stay on equal footing, with Exxon after its XTO TKO stunned the markets last Monday.
Exxon's acquisition of XTO Energy is not just a big bet on the U.S. natural gas sector, but also on the technological expertise that unconventional asset exploration firms in the U.S. like XTO have developed, and which can be leveraged to tap worldwide resources.
To that end, Exxon announced with the planned acquisition that it will set up a new office to be run out of the XTO headquarters
The oil and gas operations section was up 5% on the day the Exxon-XTO deal was announced, in the immediate wake of the Exxon shot across the unconventional resource bow, and individual names among independent energy companies continue to see spikes in share prices throughout last week.
A spotlight was placed on some of the biggest independents in the oil and gas sector, including
Devon's share price has been climbing steadily since the Exxon-XTO deal was announced last Monday, and reached its highest level today in more than a week of $70.65, or $4 more than last Tuesday. EOG Resources and Southwestern Energy were also in 52-week high territory a week after the Exxon-XTO deal.
Encana also reached a weekly high on Monday with a gain of more than $1.50 since last week to a close of $33.19 -- it had come into the month at a 52-week low after Encana split into two separate companies in Dec. 3. Anadarko has gained approximately $2 since the Exxon-XTO deal was announced.
Chesapeake Energy has also gained more than $2 since the Exxon-XTO deal was announced, and on Monday closed at $26.38 -- though it was still below a 52-week high attained in October.
The number of potential energy sector targets spreads as far and wide as an Exxon-Valdez-style oil spill, so we asked TheStreet.com readers, which big independent do you think will be the next tapped by the energy giants in their M&A exploration?
Chesapeake Energy was far and away the No. 1 target for a takeover, the survey respondents said. Approximately 46% of survey takers said Chesapeake will be the next major energy sector M&A play.
In a virtual tie for second place were Devon Energy and Anadarko, with 16% and 15% of survey takers pegging these two firms as the likeliest targets for a takeover.
Southwestern Energy and EOG Resources finished third and fourth, with 8% and 7% of the survey takers believing these firms would be the next to be gobbled up by the energy giants.
-- Reported by Eric Rosenbaum in New York.
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