8-KSecurities & Listing

EXXON MOBIL CORP 8-K Report, Unregistered Securities Sale (Jan 17, 2017)

Filed January 17, 2017For Securities:XOM

Summary

Exxon Mobil Corporation (XOM) announced on January 16, 2017, an agreement to acquire oil and gas properties in the Permian Basin from entities owned by the Bass family. This strategic acquisition will be primarily settled through the issuance of approximately $5.6 billion worth of Exxon Mobil common stock at the time of closing, with potential for an additional $1.02 billion in contingent cash payments tied to future drilling success. The transaction, expected to close around February 28, 2017, represents a significant expansion of XOM's presence in the Permian Basin, a highly prospective and prolific unconventional oil play. The issuance of stock indicates a belief in the company's valuation and a desire to conserve cash, while the contingent payments align with performance-based incentives. Investors should monitor the impact of these new assets on future production and cash flow, as well as the dilution resulting from the stock issuance.

Key Highlights

  • 1Exxon Mobil to acquire Permian Basin oil and gas properties from Bass family entities.
  • 2Acquisition value of $5.6 billion to be settled primarily with Exxon Mobil common stock.
  • 3Potential for up to $1.02 billion in contingent cash payments linked to future drilling activity.
  • 4Transaction is expected to close on or about February 28, 2017.
  • 5Approximately 63 million shares would be issued based on the stock price as of January 16, 2017.
  • 6The sale of securities is structured as a private placement to accredited investors, relying on an exemption from registration.
  • 7This move signifies a strategic expansion into the key Permian Basin resource play.

Frequently Asked Questions

The primary strategic rationale is to significantly expand Exxon Mobil's presence in the Permian Basin, a highly prospective and resource-rich unconventional oil play, thereby bolstering its future production and reserves.

The acquisition will be primarily financed by issuing new shares of Exxon Mobil common stock, valued at $5.6 billion at closing. This will result in some dilution for existing shareholders. The exact number of shares will be determined by the volume-weighted average trading price over a 10-day period prior to closing.

Exxon Mobil may make additional contingent cash payments of up to $1.02 billion. These payments are tied to the success of future drilling and completion activities on the acquired properties, aligning the payment structure with operational performance.

The transaction is structured as a private placement to accredited investors, relying on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933. This allows the company to avoid the complexities and costs associated with a public registration process for this specific transaction.