RBC Capital Downgrades Exxon (NYSE:XOM)

Exxon Mobil Corp. (NYSE:XOM) was downgraded by RBC Capital Markets on their significant exposure to the natural gas market, which prices have continue to be weak on enormous supply.

This is a nod toward the acquisition of XTO Energy earlier in the year, which made Exxon the largest natural gas producer in the U.S.

Discoveries of huge reserves of natural gas have put downward pressure on all natural gas companies who aren't diversified, and those that aren't, have been scrambling to pick up oil assets to counter the weak natural gas prices.

Consequently, RBC downgraded them from "Outperform" to "Sector Perform," while lowering the price target over the next 12 months to $70 a share from $76 a share.

Exxon (NYSE:XOM) Buying Back $3 Billion Shares

In a nod toward shareholders, Exxon Mobil Corp. (NYSE:XOM) said they're going to buy back $3 billion of its shares in the quarter to shrink the effects it had of diluting shares from their acquisition of XTO Energy.

The giant energy company also said they'll refinance or pay back all the assumed debt from the deal as well.

Outstanding shares in the company rose by 416 million, or about 9 percent from the $25 billion acquisition, said vice president for investor relations, David Rosenthal, on a conference call.

The amount of assumed debt needed to be refinanced or paid off is $11 billion.

This is a natural gas play from a long-term perspective, where Exxon Mobil received with XTO, at minimum, 45 trillion cubic feet of recoverable gas. And just as important, the immediate expertise of those in the company who specialized in the sector.

Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP) Coming Back to Texas?

Exxon Mobil, Chevron, ConocoPhillips and Texas

It has been a long time since major oil companies like Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP) had significant stakes in oil and gas in Texas, but with new technology, that could be about to change, as evidenced by the acquisition of XTO by Exxon Mobil, which may be the first of many as oil and gas producers look for new production sites.

To get an idea of how things have changed over the last 15 years or so, independent companies drilled 96 percent of the well in Texas in 2008, while the five major companies, which include Exxon Mobil, Chevron, ConocoPhillips, Shell and BP, only accounted the remaining 4 percent.

Some of the drilling spots left by the majors had significant reserves in them, but the cost of extracting it was prohibitive at the time, with prices not able to support it. Now with prices up and cost lowered, as well as new ways to extract the oil and gas, major companies may be revisiting Texas to get a piece of the significant pie that still remains under the ground there.

Exxon Mobil (NYSE:XOM) and XTO Energy (NYSE:XTO)

Exxon Mobil Waiting Period over for XTO Energy

A required regulatory hurdle entailing a waiting period for Exxon Mobil (NYSE:XOM) to take over XTO Energy (NYSE:XTO) has been met, and the fact that there were no objections or actions taken by the Federal Trade Commission or the Justice Department implies an open door and that Exxon and XTO can go forward with the deal. The waiting period officially ended on Monday.

Terms of the deal are straightforward, with Exxon acquiring XTO in an all-stock deal for the company. One other key requirement will be for the shareholders to approve the deal, which doesn't seem to be a problem at this time. Exxon will also take over about $10 billion in debt XTO holds. The deal is expected to close on June 30 according to CEO Rex Tillerson.

According to XTO, they are sitting on 45 trillion cubic feet of gas which is trapped in tight shale formations, which formerly was cost-prohibitive to extract. New technology exists where it can be done on a much less expensive basis.

Exxon believes natural gas will be an important generator of electricity in the years ahead.