) --


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surprise acquisition of

XTO Energy

( XTO) is widely expected to set off a wave of mergers and acquisitions in the energy sector.

The 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 on Monday morning.

Energy market experts don't expect rival bids for XTO, as the hefty 25% premium offered by Exxon and the receptiveness of XTO management indicates the companies interests are aligned for the deal. Still, one can be sure that the energy giants, from


( CHV) to

Royal Dutch Shell




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(BP) - Get BP p.l.c. Sponsored ADR Report


Total S.A.

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will be looking to satiate the same sector hunger evinced by the Exxon move.

Exxon-XTO Deal Fuels Buyers

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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 and focused on global development and production of unconventional resources.

The market seemed to expect

Exxon's move on XTO Energy to lubricate more M&A action in the energy sector. The oil and gas operations section was up 5% on Monday mid-afternoon. The biggest gainer in the immediate wake of the Exxon shot across the unconventional resource bow was

Delta Petroleum

( DPTR), up more than 12% on Monday afternoon.

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Devon Energy

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EOG Resources

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Chesapeake Energy

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were up between 5% and 6% on speculation about their attractiveness as potential targets.


(ECA) - Get Encana Corporation Report

was up close to 5%.

Anadarko Petroleum

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was up more than 4% on Monday afternoon.

The boost to oil and gas stocks was widespread.

Carrizo Oil & Gas

(CRZO) - Get Carrizo Oil & Gas, Inc. Report

was up 8%, as was

Cabot Oil & Gas

(COG) - Get Cabot Oil & Gas Corporation Report


Southwestern Energy

(SWN) - Get Southwestern Energy Company Report

was up close to 8%.

Newfield Exploration


was up 8.5% on Monday afternoon.

The number of potential energy sector targets spreads as far and wide as an Exxon-Valdez-style oil spill, but the biggest among all of these independents are likely to receive the most M&A scrutiny.

So which big independent company do you think will be the next tapped by the energy giants in their M&A exploration?

-- Reported by Eric Rosenbaum in New York.


>>Exxon Deal Sparks Energy Run-up