Exxon Mobil and pioneer

Exxon Mobil Acquires Pioneer in $59.5B All-Stock Deal

Exxon Mobil Corp has sealed a monumental all-stock deal valued at $59.5 billion to acquire its U.S. counterpart, Pioneer Natural Resources, marking Exxon’s most significant acquisition since its purchase of Mobil Oil in 1998. The agreement, subject to regulatory approval, promises to forge the largest producer in the preeminent U.S. oilfield, ensuring a decade of cost-effective production.


Within four years of the deal’s conclusion, the combined entity is poised to escalate oil and gas production by an additional 700,000 barrels per day, culminating in a staggering 2 million. This offer bestows a noteworthy 9% premium over Pioneer’s average price for the 30-day period leading up to October 5, when preliminary reports of negotiations surfaced.


Experts from RBC Capital Markets affirm Pioneer’s standing as the premier operator in the Permian oilfield, constituting 9% of gross production, while Exxon claims the fifth position with a 6% share. Exxon’s Chief Executive, Darren Woods, conveyed in an interview that this merger will yield extensive synergies, emphasizing the complementary nature of both enterprises. “We expedited this transaction and commenced discussions about the synergies inherent in our respective operations,” he stated.


The amalgamated company is resolutely committed to a reduction in greenhouse gas emissions and an augmentation of oil output per well. This goal will be actualized through the convergence of Exxon’s cutting-edge technology with Pioneer’s economically efficient operational processes. Woods avowed that he envisions no antitrust impediments to the successful completion of this deal. Scott Hanold of RBC Capital Markets concurs, stating, “The combined market share appears to fall below thresholds that would typically trigger regulatory action.”


This proposed merger would vest control of the Permian Basin shale field and its expansive infrastructure in the hands of four of the most prominent U.S. oil companies. Nonetheless, the administration structure of the merged operation remains uncertain, given the suspension of its shale chief last week and Pioneer CEO Scott Sheffield’s declaration of his intent to retire from Pioneer by year-end.


This acquisition succeeds Exxon’s $4.9 billion all-stock agreement for Denbury in July, a strategic move aimed at fortifying Exxon’s burgeoning low-carbon enterprise. Analysts indicate that the company had amassed approximately $30 billion in cash in anticipation of such transactions.


Following a period of significant losses and substantial debts, Exxon navigated a turnaround over the last two years by implementing stringent cost-cutting measures, divesting numerous assets, and reaping the benefits of elevated energy prices catalyzed by Russia’s incursion into Ukraine. These endeavors were complemented by the company’s concerted focus on ameliorating its own emissions.


In the preceding year, Exxon reported a record profit of $56 billion, a stark contrast to the $22 billion deficit incurred during the throes of the COVID-19 pandemic. This landmark deal, slated for completion in early 2024, is poised to catapult Exxon into an unequivocal leadership position in the Permian Basin—an economic powerhouse in U.S. oil drilling with remarkably low production costs averaging around $10.50 per barrel. The acquisition also surpasses Shell’s $53 billion procurement of BG Group in 2016, establishing the oil giant as a preeminent figure in the global liquefied natural gas market.


In this monumental $59.5 billion all-stock transaction, Exxon Mobil and Pioneer Natural Resources are forging a transformative partnership, enabling Exxon to emerge as the paramount producer in the U.S.’s most prolific oilfield, with a decade of economical production securely anchored. With an anticipated culmination in early 2024, this deal also sets the stage for Exxon to fortify its commitment to reducing greenhouse gas emissions, while significantly amplifying its daily oil and gas output by 700,000 barrels.

Source: Reuters

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