The deal could signal a new rush to own natural gas assets by major integrated producers, and perhaps the start of a significant consolidation in the energy industry.
"Exxon is the group leader and it sets the trend. I would expect more acquisitions in the next three to six months," said Fadel Gheit, senior energy analyst for Oppenheimer.
Exxon is closely watched in the industry and an acquisition like XTO could prompt other companies like Royal Dutch Shell PLC, BP BLC or Chevron Corp. to move.
Potential targets include big natural gas companies like Chesapeake Energy, Devon Energy and Anadarko, Gheit said.
XTO shows the priority that major producers are giving to natural gas as a fuel source. New technology has unlocked trillions of cubic feet of natural gas at home, meaning energy producers do not have to navigate tricky political environments overseas.
That doesn't mean that those projects are being excluded.
Exxon just last week gave the go-ahead for a $15 billion natural gas project in Papua New Guinea, positioning the world's largest publicly traded oil company to provide energy to a fuel-hungry China.
XTO claims about 45 trillion cubic feet of gas, much of it trapped in tight formations known as shale. Shares in the company jumped 16 percent, or $6.64, to $48.13 in early trading.
Shares of Exxon fell 3.5 percent, or $2.51, to $70.32.
Exxon has signaled recently that it was moving increasingly toward landing natural gas assets. Once the deal closes, Exxon said it will establish a new organization to manage global development and production of unconventional resources.
The company, based in Irving, Texas, will issue 0.7098 common shares for each common share of XTO, representing a 25 percent premium to XTO stockholders. Exxon also will assume $10 billion in XTO debt.
The deal values XTO's shares at $51.69, based on the closing price Friday.
"XTO has a proven ability to profitably and consistently grow production and reserves in unconventional resources," Bob Simpson, chairman and founder of XTO, said in a statement.
Simpson is one of the highest paid executives in the United States. His compensation last year was valued at $53.5 million.
He retired as CEO in 2008.