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How has Exxon Mobil performed since its acquisition of natural gas giant XTO Energy?

In December of 2009, Exxon Mobil (XMO) announced that it had reached a deal with XTO energy to purchase the natural gas company in an all-stock deal. Initially, the stock price of XOM fell 4.3%, signaling a disapproval of the deal by the market. The deal was finalized in mid 2010. The acquisitions took place before the term fracking was became a controversial issue and natural gas prices were roughly twice as high as of 5/31/2013. How has the purchased performed for Exxon Mobil?

Looking at the stock prices since the purchase, XMO has lagged behind the S&P500, returning about 34% to the S&P500 49%. XMO has also lagged behind competitor Chevron, which returned 60% during the same period. In addition, Chevron provided a dividend yield around 3.1% % versus XOM 2.4%.

The fall in natural gas prices has hurt XOM. The CEO recently reported the timing was off for the acquisition and the payback for the purchase will be longer than initially expected. Other reports indicate that XOM paid too much for XTO Energy. Chevron, for the most part, has diversified natural gas outside the United States and has not been hurt by the fall in domestic natural gas prices. Either way, the cheaper domestic natural gas that consumers and business have been enjoying for that last few years has weighed on XOM.

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