When Irving, Texas–based oil supermajor Exxon Mobil Corp. began mulling the purchase of independent gas producer XTO Energy, it turned to one of the energy industry’s most legendary advisers: JPMorgan. The bank’s team, led by global head of M&A James (Jimmy) Elliott, has advised on many energy deals, including Phillips Petroleum Co.’s $25 billion merger with Conoco in 2002 and Burlington Resources’ $37 billion sale to ConocoPhillips Co. in 2006. It also presided over the $86 billion merger of Exxon Corp. and Mobil Corp. that created ExxonMobil in 1999.
Elliott, 58, and team members Douglas Petno, Laurence Whittemore and Jeremy Wilson, were called in to help after XTO approached ExxonMobil in the summer of 2009. The Fort Worth, Texas–based company had been battered by declining natural-gas prices and surging supplies. Recognizing that XTO needed to merge with a big player so it could compete in an increasingly capital-intensive industry, chairman Bob Simpson and board member Jack Randall proposed an acquisition to ExxonMobil.
For Elliott, who cut his teeth doing energy deals in the 1970s at First Boston Corp., the XTO takeover made strong strategic sense. Demand for natural gas is expected to grow 1.8 percent annually through 2030, compared with 0.8 percent for oil. Also, natural-gas prices are at a cyclical low since hitting their peak in 2008. Buying XTO added 45 trillion cubic feet of gas resource base to ExxonMobil’s portfolio, more than half of it in the high-growth shale-gas category.
Elliott and his team helped ExxonMobil smoothly execute the $35.5 billion deal in less than four months. “Jimmy is highly regarded in the energy sector for his superb industry expertise,” attests Stephen Arcano, a partner at law firm Skadden, Arps, Slate, Meagher & Flom who advised XTO. The deal was finalized ten days before Christmas 2009 and completed in June 2010, bringing JPMorgan an estimated $33 million in fees. Securities filings show that XTO’s advisers, Jefferies & Co. and Barclays Capital, each earned $24 million.
