Already the largest natural gas producer in the United States, ExxonMobil is increasing its investment in the Marcellus play with the acquisition of certain shale rights. On June 2, 2011, ExxonMobil acquired Phillips Resources, Inc. (Warrendale, Pennsylvania) and TWP Inc. (Butler, Pennsylvania). With these acquisitions, ExxonMobil now has added approximately 317,000 acres to its Marcellus holdings. Previously, ExxonMobil had acquired certain reserves throughout Western Pennsylvania, from XTO Energy.
Earlier this year, Chevron completed its acquisition of Atlas Energy (Moon Township, Pennsylvania). This acquisition made Chevron an instant player in the Marcellus market. These acquisitions are further proof that the shale opportunities, first with Marcellus and then with Utica, have significant potential. Big players such as ExxonMobil and Chevron would not be entering into the market at this point without doing their homework about such an investment.
These acquisitions also illustrate the options smaller companies have as a result of the shale opportunities. Smaller companies may not have the ability or appetite to develop their Marcellus holdings due to the significant capital and expertise that are required. Now they have an option to cash in or partner up with larger entities that are trying to enter or expand their role in the market.
Ed Friel is a member of the Schneider Downs Energy and Resources Industry Group.
Schneider Downs provides accounting, tax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.