In 2024, XTO Energy, a subsidiary of Exxon Mobil, made headlines with its strategic decision to divest oil and gas facilities across key regions in the United States. This move reflects a broader trend within the energy sector, as companies reposition themselves to maximize value from their most competitive assets. Among the most notable transactions this year was XTO’s sale of its facilities in the Freestone Trend area of East Texas to Houston-based Hilcorp Energy.
A Landmark Deal in East Texas
The Freestone Trend deal marks a significant shift in Exxon Mobil’s asset portfolio. Spanning six counties—Freestone, Limestone, Robertson, Leon, Milam, and Navarro—the Freestone Trend assets cover 336,000 acres. The transaction included approximately 2,800 active wells, gathering systems, and treatment plants, reinforcing Hilcorp’s reputation as a leading buyer of conventional oil and gas assets.
While financial terms were not disclosed, the rationale behind the deal is clear. Exxon Mobil has been sharpening its focus on the Permian Basin, a region rich in high-quality shale reserves. This strategic pivot allows Exxon to concentrate on assets with greater production potential, particularly following its $60 billion acquisition of Pioneer Natural Resources.
Download XTO 2024 Facility Transfer Report
Supporting Employees Through the Transition
With such a large-scale divestment, the human impact is significant. Roughly 135 employees supporting the Freestone assets faced potential layoffs as part of the transition. However, Exxon Mobil emphasized its commitment to assisting employees, working to place as many as possible with Hilcorp. Those not offered positions were provided with severance packages.
This focus on employee support underscores Exxon’s recognition of the workforce’s importance, even as it reshapes its operational footprint.
Hilcorp’s Strategy: Breathing New Life into Declining Assets
Hilcorp Energy’s acquisition aligns perfectly with its business model. Unlike Exxon, which is gravitating toward high-return shale assets, Hilcorp specializes in acquiring and managing conventional vertical wells. These assets, while often overlooked by larger operators, still hold long-term value due to their steady, albeit declining, production profiles.
“The Freestone assets fit well with Hilcorp’s strategy of acquiring conventional acreage,” commented Matthew Bernstein, a senior shale analyst at Rystad Energy. He noted that while XTO’s production volumes in the area peaked in 2009, vertical wells often have a long afterlife, making them an attractive investment for a company like Hilcorp.
A Broader Trend of Transformation
XTO Energy’s divestments in 2024 extend beyond the Freestone Trend. The uploaded list of facilities sold this year reveals that several other assets across the United States have also been transferred to new owners. Regions such as Amarillo have seen shifts, with companies like Highmark Energy Operating LLC stepping in to take over formerly XTO-managed facilities.
This wave of transactions is emblematic of a larger industry trend: major players shedding non-core assets while smaller, nimble operators step in to extract value from what remains.
Balancing Act: The Future of Energy Operations
For Exxon Mobil and XTO Energy, 2024 represents a year of critical decision-making. As the industry continues to evolve, the ability to adapt and optimize portfolios will remain essential. For buyers like Hilcorp, these acquisitions represent an opportunity to extend the productive life of conventional assets, ensuring their viability for years to come.
As the energy landscape shifts, both sellers and buyers play pivotal roles in shaping the industry’s future. With XTO Energy’s strategic repositioning and Hilcorp’s growing portfolio, the legacy of these assets continues, albeit under new stewardship.
