ExxonMobil Enters Barnett Shale Venture

ExxonMobil Corp. has entered the Barnett Shale natural gas play not by purchasing a large independent company, as many expected, but rather through a joint venture with the privately-held Harding Co. of Dallas.

Sources who asked not to be identified because they work with ExxonMobil have confirmed that the multinational giant has begun a joint venture with Harding to develop Barnett Shale properties in the Mansfield-Grand Prairie area in southern Tarrant and northern Johnson counties.

Harding already has 25 Barnett Shale wells in Johnson, Parker and Wise counties, producing an average of 24.5 million cubic feet of gas per day. Harding also operates in other conventional fields in north Texas.

ExxonMobil declined to comment on its possible Barnett Shale activities, and Harding officials declined requests for an interview. Although the predecessor companies of ExxonMobil have a history in Texas dating back to the beginning of the state’s energy industry, Exxon Mobil has reduced its profile as a Texas producer in the last decade by selling off much of its extensive holdings, particularly in the Permian Basin.

The Harding Co. is a small, Dallas-based independent founded in 1953 by Charles Harding and his brother, Roy. The company drilled hundreds of wells in north Texas and entered the Barnett Shale play in 2002. The company today is run by Charles Harding’s son Rick, a Fort Worth resident.

The prolific Barnett Shale field, which stretches from Wise and Denton Counties west to Palo Pinto and Erath Counties and south through Tarrant County to Johnson and Hill Counties, has become Texas’ largest gas producing field. This year, its production will exceed 400 billion cubic feet, making it among the three largest in the United States, along with Prudhoe Bay in Alaska and the San Juan Basin in northern New Mexico.

Such production has caused several major multinationals to reverse their decade-long trend of reducing their production in the continental United States. Shell Energy, Marathon Oil and Conocophillips have come into the Barnett Shale in recent months through either joint ventures or in the case of Conocophillips’ proposed purchase of Burlington Resources of Houston, an outright acquisition.

ExxonMobil was believed to be a potential bidder either for Chief Oil & Gas, the privately-held Dallas producer that put itself on the block last month and is expected to fetch up to $2 billion, or one of the larger Barnett Shale producers such as Devon Energy of Oklahoma City or XTO Energy of Fort Worth. Chairman Glenn Darden of Quicksilver Resources of Fort Worth, which has a major position in the Barnett Shale in Hood County, had to fend off a question about a possible ExxonMobil purchase of Quicksilver at Quicksilver’s third-quarter earnings conference call.

At its annual meeting in May, outgoing ExxonMobil Chairman Lee Raymond said the company would "continue to be a seller" of its properties in Texas. But Raymond is retiring effective Jan. 1 in favor of new president Rex Tillerson, a Wichita Falls native and graduate of the University of Texas at Austin.

Mobil dates its involvement in Texas to a predecessor, Magnolia Oil, which was involved in Texas’ first oil field at Corsicana in 1894. Exxon predecessor Standard Oil of New Jersey bought half of Humble Oil, long Texas’ biggest oil producer, in 1919. For years, the Standard-Humble company was a major producer in the Gulf Coast, on the King Ranch in south Texas and in the Permian Basin of West Texas.

Although Exxon and Mobil, then separate companies, were by far the largest producers of crude oil and natural gas in Texas as recently as 1995, their subsequent property sales reduced the merged company’s total Texas production by last year to no more than No. 4 among oil and gas producers in Texas.

Copyright (c) 2005, Fort Worth Star-Telegram, Texas Distributed by Knight Ridder/Tribune Business News.