Exxon Mobil in Advanced Talks to Acquire Pioneer Natural Resources for $60 Billion

Shares of Pioneer Natural Resources surged nearly 11% on Friday following reports that Exxon Mobil, the largest U.S. oil and gas company, is in advanced talks to acquire the shale producer in a deal worth an impressive $60 billion. If successful, this would mark Exxon’s largest acquisition since its $81 billion purchase of Mobil in 1998.

The potential deal would position Exxon as one of the leading producers in the highly profitable Permian basin, the largest shale oil field in the United States. With the country’s oil production nearing a record-breaking 13 million barrels per day, this acquisition could significantly enhance Exxon’s market presence.

Pioneer Natural Resources’ shares were trading at $238.50 on Friday, valuing the company at nearly $56 billion. While Exxon’s shares experienced a slight decline of 1.6%, the offer still implies a premium of approximately 20% to Pioneer’s Thursday closing price.

Industry experts have noted that the premium offered to Pioneer seems slightly low considering the company’s unique scale and quality of inventory. However, given the limited number of alternative buyers for an acquisition of this magnitude, it is unlikely that Exxon would pay a substantial premium for the assets.

Pioneer holds an estimated 6,300 net locations of high-quality inventory, making it an attractive target for Exxon. The deal value suggests that Exxon is paying around $4.5 million for Pioneer’s high-quality locations and $3.7 million for all locations, surpassing recent M&A trends that valued assets around $3 million per location.

While negotiations are still underway, an agreement between Exxon and Pioneer could be reached in the coming days. However, any potential deal may face political and regulatory scrutiny, particularly due to the consolidation of operations in the Permian basin.

The U.S. crude oil output reached nearly 13 million barrels per day in July, approaching the previous record set in November 2019. Oil majors, including Exxon, have prioritized returning cash to shareholders rather than increasing production. This potential deal could set a precedent for further large-scale M&A activity in the sector, leading to a more consolidated and mature shale business.

Overall, the talks between Exxon Mobil and Pioneer Natural Resources have generated significant market interest and could have far-reaching implications for the oil and gas industry. Investors and industry observers eagerly await the outcome of these negotiations, which could reshape the landscape of the Permian basin and potentially drive further consolidation in the sector.