ExxonMobil said Wednesday it would buy U.S. shale driller Pioneer Natural Resources in an all-stock deal valued at $59.5 billion, or $253 per share.
Including debt, the proposed deal rises to a value of $64.5 billion.
The acquisition deal would make ExxonMobil the largest oil producer in the Permian Basin, a massive oilfield that straddles the border between Texas and New Mexico. Drilling the Permian accounted for 18 percent of all U.S. natural gas production last year, according to the U.S. Energy Information Administration.
“I think fossil fuels, as the world looks to transition and find lower sources of affordable energy with lower emissions, fossil fuels oil and gas are going to continue to play a role over time,” ExxonMobil CEO Darren Woods said during an interview with CNBC. “That may diminish with time. The rate of that is, I think, not very clear at this stage. But it will be around for a long time.”
Woods explained that Exxon and Pioneer will be able to use their combined capabilities to drive down emissions and produce lower carbon intensity oil and gas.
Pioneer’s more than 850,000 net acres in the Midland Basin will merge with Exxon’s 570,000 net acres in the Delaware and Midland Basin, which will allow the combined company to reduce costs.
“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge,” said Mr. Woods. “The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.”
‘Largest Footprint’
Once the deal closes, Exxon’s production volume in the Permian Basin will more than double to 1.3 million barrels of oil-equivalent per day, based on 2023 volumes. It’s projected to climb to about 2 million barrels of oil equivalent daily in 2027.“The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” Pioneer CEO Scott Sheffield said in a statement.
Pioneer shareholders will receive 2.32 shares of Exxon for each Pioneer share they own.
The transaction, expected to close in early 2024, will leave four of the largest U.S. oil companies in control of much of the Permian Basin shale field and its extensive infrastructure.
Pioneer is the Permian oilfield’s largest operator accounting for 9 percent of gross production, while Exxon occupies the No. 5 spot with 6 percent, according to RBC Capital Markets analysts.
The Permian is highly valued by the U.S. energy industry because of its relatively low cost to extract oil and gas, with rock-bottom production costs averaging about $10.50 per barrel.
The acquisition will be Exxon’s biggest since its $81 billion purchase of Mobil Oil in 1998. But it is not its first move into shale. It acquired XTO Energy for about $41 billion in 2010, a deal that led to a massive writedown a decade later as natural gas prices tumbled.
Natural gas rigs in operation have declined over 26 percent in the United States since the start of the year, according to government data, largely owing to the rising costs for drilling materials and labor over the past two years.
