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

Shares of Pioneer Natural Resources surged by 10% in premarket trading on Friday following reports of advanced talks between Exxon Mobil and the shale producer. The potential deal, valued at approximately $60 billion, could mark Exxon’s largest acquisition since its Mobil deal in 1998 and solidify its position in the lucrative Permian basin.

According to Reuters, if negotiations progress successfully, an agreement between Exxon and Pioneer could be reached in the coming days. Pioneer, with a market value of $50 billion, is one of the leading producers in the Permian basin, known for its cost-effective oil and gas extraction.

While investors are closely watching for a substantial premium in any potential deal, analysts from TD Cowen note that recent explorer and producer M&A transactions have not offered such premiums. However, any agreement may attract political and regulatory scrutiny due to the consolidation in the Permian basin.

Exxon, which reported a record profit of $55.7 billion in 2022, had nearly $30 billion in cash by the end of June. Analysts suggest that Exxon may fund the deal primarily through equity, considering the higher cost of debt compared to its dividend yield.

The potential acquisition holds significance as Pioneer is the largest operator in the Permian basin, accounting for 9% of gross production, while Exxon ranks fifth with 6%. Combined, the two companies would contribute to 15% of operated Permian production and 6% of total US production. RBC Capital Markets analyst Scott Hanold highlights the relevance of these figures in light of potential scrutiny from the Federal Trade Commission (FTC) regarding consolidation.

The oil and gas industry experienced record profits last year due to soaring oil and gas prices. With Exxon’s interest in acquiring Pioneer, the deal could reshape the industry landscape and further strengthen Exxon’s presence in the Permian basin.

Please note that the information provided in this article is based on reports and negotiations, and no official agreement has been reached at the time of writing.