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Natural gas has been the "black sheep" of the energy sector. Natural gas is trading at historic lows.
Why is this purchase noteworthy? Exxon Mobil (XOM) traditionally has been a pure oil company. Now Exxon makes a bold move into the natural gas segment by buying one of the largest US natural gas producers, XTO Energy (XTO).
Jim Halloran of Financial America Securities said: "the deal validates the notion that the natural gas market in the United States will have a lot more ability to generate interest than people had thought."
Unlike the oil market, which is international, the natural gas market is domestic. All of the political problems associated with oil are not present in the natural gas market. The US controls its own production and distribution. The risks are fewer and the market is more stable.
Some analysts feel that this deal will boost the stocks of other natural gas companies. They also are looking for more such deals to be completed.
If "buying low" is what you should do, then Exxon's move is right on target.
Exxon's move into natural gas may be a subtle move to shift its efforts away from the oil sector into a more stable domestic market.
Would you buy natural gas stocks?
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