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Exxon Buys XTO to Shore Up Flagging Reserves

So Exxon pays up for major shale gas assets in the US.  Why?  As Gregor Macdonald notes on his blog, it’s not because they are a visionary company who see a bright future for US natural gas with plenty of government subsidy, but instead because they are a more conservative one that acts on historical evidence, and makes safe disciplined decisions.

As we have noted before, the scale of the gas reserves that have been added in North America thanks to new drilling technologies is huge, and Exxon’s play for XTO confirms that indeed the game has changed for natural gas.

But this move also adds to the evidence that new oil reserves are getting harder and harder to come by.  The major oil companies all have problems with their inability to add to their oil reserves.   By buying natural gas reserves they can boost their reserve life index’s again. Unfortunately for them this does not hide the fact that they are running out of oil.