Exxon Mobil in Advanced Talks to Acquire Pioneer Natural Resources in $60 Billion Deal
Shares of Pioneer Natural Resources soared by 11% on Friday following news that Exxon Mobil, the largest U.S. oil and gas company, is engaged in advanced discussions to acquire the shale producer in a deal valued at an impressive $60 billion. If the deal goes through, it would mark Exxon’s largest acquisition since its $81 billion purchase of Mobil in 1998, positioning the company as one of the leading producers in the highly profitable Permian basin, the largest U.S. shale oil field.
The potential acquisition comes at a time when U.S. oil production is nearing a record high of 13 million barrels per day. Pioneer Natural Resources’ shares closed at $238.50 on Friday, valuing the company at approximately $56 billion, while Exxon’s shares experienced a 1.2% decline. The offer suggests a premium of around 20% to Pioneer’s closing price on Thursday, which is in line with other mergers in the exploration and production sector this year.
However, some industry experts believe that the premium offered to Pioneer is slightly low considering the company’s unique scale and quality of inventory. Pioneer holds an estimated 6,300 net locations of high-quality inventory, making it an attractive asset for potential buyers. The deal value implies that Exxon is paying roughly $4.5 million for Pioneer’s high-quality locations and $3.7 million for all locations, exceeding recent M&A trends in valuing assets at around $3 million per location.
While negotiations are still ongoing, an agreement between Exxon and Pioneer could be reached in the coming days. However, any deal of this magnitude is likely to attract political and regulatory scrutiny. The Federal Trade Commission (FTC) may closely examine the consolidation of assets in the Permian basin, given Pioneer’s status as the largest operator in the region.
The potential acquisition of Pioneer by Exxon could set a precedent for further large-scale mergers and acquisitions in the sector. If ExxonMobil becomes the dominant player in the Permian basin, it could lead to a more mature and consolidated shale sector, according to industry analysts.
Overall, the proposed deal between Exxon Mobil and Pioneer Natural Resources has generated significant market interest, with the potential to reshape the landscape of the U.S. oil and gas industry. Investors and industry stakeholders will closely monitor the outcome of the negotiations, as it could have far-reaching implications for the sector’s future.