February 15, 2011 / 4:48 PM / 7 years ago

UPDATE 4-Exxon reserves jumped in 2010 on XTO deal

* Reserves 47 pct liquids, 53 pct gas

* Gas replacement ratio 328 pct

* Shares fall more than 2 pct (Adds analyst comment, updates share price to close)

By Matt Daily and Anna Driver

NEW YORK/HOUSTON, Feb 15 (Reuters) - Exxon Mobil Corp (XOM.N) said its oil and gas reserve additions last year were double its production, marking the biggest jump in more than a decade, with gains fueled by the oil company’s purchase of XTO Energy Inc.

Exxon said last year’s reserve additions were the highest since the merger of Exxon and Mobil in 1999. Still, Exxon shares fell more than 2 percent, a drop analysts linked to the quality of the reserve growth. That was mostly due to Exxon’s purchase of U.S. natural gas producer XTO last year.

“On the surface it looked like a very strong number,” Brian Youngberg, oil analyst at Edward Jones, said. “But the majority of it is natural gas, and much of it is in the United States, wehre prices are very weak.

Excluding the reserves from the acquisition of XTO, Exxon’s reserve replacement rate would have only been 45 percent, Paul Cheng at Barclays told clients in a note on Tuesday.

Big oil companies like Exxon have struggled in recent years to gain access to new supplies as countries with vast reserves like Venezuela have handed those over to state-run firms.

Investors like to see companies replace at least 100 percent of their output, since anything below that figure indicates the asset base is shrinking.

Exxon, the world’s largest publicly traded company, said it increased its proved reserves by 3.5 billion oil equivalent barrels, or 209 percent of its production, bringing its reserve base to 24.8 billion oil equivalent barrels.

Reserve additions from acquisitions and subsequent revisions totaled 3 billion oil-equivalent barrels. Additions also came from the Sakhalin-1 Arkutun Dagi project in Russia and other countries including Canada, the United States, Nigeria, Norway and Abu Dhabi, the Irving, Texas, company said.

Liquid additions totaled 905 million oil-equivalent barrels for a 102 percent replacement ratio and gas additions totaled 2.6 billion oil-equivalent barrels for a 328 percent replacement ratio.

Exxon purchased U.S. natural gas company XTO last year, in a deal aimed at increasing Exxon’s shale gas business in the United States and around the world. In its long-term outlook, Exxon sees natural gas demand growing, fueled primarily by power demand in developing countries.

The proved reserves base is split between 47 percent liquids and 53 percent gas, and includes oil sands extracted by mining and equity company reserves.

Exxon’s shares fell $1.94, or 2.3 percent, to close at $82.97 on the New York Stock Exchange. (Editing by Dave Zimmerman, Gary Hill)

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