Exxon set to buy shale rival Pioneer for $60 billion in stock -sources
Exxon Mobil is set to make a groundbreaking move in the energy industry with its planned acquisition of U.S. rival Pioneer Natural Resources for approximately $60 billion. This deal will position Exxon as the leading player in the largest U.S. oilfield, ensuring a decade of cost-effective production. While the details are yet to be made public, sources familiar with the matter reveal that Exxon will offer a pure stock deal valued at over $250 per share for Pioneer.
The potential acquisition of Pioneer would mark the largest deal of the year and Exxon’s most significant since its $81 billion purchase of Mobil Oil in 1998. The announcement comes as Exxon continues to rebound from recent challenges, including substantial losses and debts. Through strategic cost-cutting measures, asset sales, and favorable energy prices driven by geopolitical events, such as Russia’s invasion of Ukraine, Exxon has successfully navigated its way back to profitability. In fact, the company recorded a record-breaking $56 billion profit last year, just two years after incurring losses of $22 billion during the COVID-19 pandemic.
Exxon’s CEO, Darren Woods, has remained steadfast in his commitment to a heavy oil-dependent strategy, despite mounting pressure from investors and politicians to embrace renewable energy. While European oil majors have shifted their focus towards cleaner energy sources, Woods’ decision to stay the course has proven fruitful for Exxon. The company’s resilience and financial prudence have allowed it to accumulate approximately $30 billion in cash reserves, specifically earmarked for potential deals.
Pioneer Natural Resources, on the other hand, has emerged as one of the most successful oil companies in the shale revolution that transformed the United States into the world’s largest oil producer. As the third-largest oil producer in the Permian Basin, Pioneer boasts impressively low production costs, averaging around $10.50 per barrel of oil and gas. Under the leadership of CEO Scott Sheffield, Pioneer has experienced rapid growth through strategic acquisitions, including recent multi-billion dollar deals for DoublePoint Energy and Parsley Energy.
The proposed acquisition of Pioneer by Exxon would solidify the company’s position as the top U.S. shale producer in terms of volume. However, the deal may face scrutiny from antitrust regulators due to the concentration of power it would create in the Permian Basin shale field. With Exxon, Chevron, ConocoPhillips, and Pioneer controlling a significant portion of the basin’s oilfield infrastructure, regulators will carefully evaluate the potential impact on competition.
Exxon’s strategic moves, including the recent purchase of Denbury Inc. for $4.9 billion, demonstrate the company’s commitment to diversifying its portfolio and expanding into low-carbon businesses. The Denbury acquisition, which focused on carbon dioxide pipelines and underground storage, aimed to bolster Exxon’s presence in the emerging low-carbon sector. By adapting and investing in new technologies and sustainable practices, Exxon is positioning itself for long-term success in a changing energy landscape.
As Exxon’s share price continues to rebound, recently reaching an all-time high of $120 per share, the company’s bold acquisition plans highlight its determination to secure a prosperous future. By leveraging its financial strength and industry expertise, Exxon is poised to reshape the energy sector and solidify its position as a global leader. The potential acquisition of Pioneer Natural Resources marks a significant milestone in Exxon’s journey towards sustained growth and profitability.