ExxonMobil To Buy Shale Rival Pioneer For $60B
ExxonMobil (NYSE: XOM), the American oil and gas giant, has struck a deal to buy shale rival Pioneer Natural Resources…
ExxonMobil (NYSE: XOM), the American oil and gas giant, has struck a deal to buy shale rival Pioneer Natural Resources (NYSE: PXM). Exxon will hand over $59.5bn in shares to acquire Pioneer and assume $5bn of the company’s debt, placing the deal’s enterprise value at $64.5bn.
Pioneer shareholders will receive 2.32 shares of Exxon for each share they own. Barring regulatory hurdles, the deal is expected to close in the first half of 2024.
- $60bn represents ExxonMobil’s largest acquisition since it was formed from the 1999 merger of Exxon and Mobil. It’s also the first big acquisition under chief executive Darren Woods, who assumed the position in 2017.
- Acquiring Pioneer will vastly expand Exxon’s output in the Permian basin, the massive American oilfield that makes up nearly one-fifth of domestic natural gas production. Exxon’s natural gas output would more than double to 1.3 million barrels of oil equivalent per day, it said in a press statement.
Exxon is doubling down on fossil fuels even as questions linger about the industry’s long-term viability. Governments are increasingly souring on fossil fuels and enacting rules to phase them out in favor of cleaner, renewable energy sources.
However, business has been stellar for fossil fuel companies recently, owing to price shocks induced by the Russia-Ukraine war. Energy prices surged worldwide in 2022, giving Exxon an unprecedented $56bn in annual net income, or $6.3mn per hour. It set the annual profit record for any Western oil and gas company, cementing its position as the leading producer in the Western world. Acquiring Pioneer will make Exxon even bigger.
- Pioneer was formed in 1997 by the merger of Parker & Parsley Petroleum, named after its founders Joe Parsley and Howard Parker, and MESA Inc., founded by the late legendary oilman T. Boone Pickens.
- Scott Sheffield was the founding CEO of the newly formed Pioneer. He held that position until he announced his retirement in 2016. However, he came back in 2019 and remains chief executive.
- Oil runs in the Sheffield family blood. Scott’s son, Bryan, founded Parsley Energy, an oil and gas producer. Parsley held a successful public listing in 2014, making Bryan a billionaire. In 2021, Pioneer (led by Bryan’s father) acquired Parsley for $4.5bn in shares.
Exxon’s stock fell nearly 5% on Wednesday after the announcement. The company has a market value of around $420bn.