Almost no one has more places to drill in West Texas than Pioneer Natural Resources—which means almost no one will have more places to drill in West Texas than Exxon Mobil. The energy giant on Wednesday announced it would buy Pioneer in an all-stock deal worth just shy of $60 billion. That is Exxon's biggest buy since it merged with Mobil 1999 in a deal worth $75.3 billion, reports the Washington Post. The Wall Street Journal adds it's the biggest corporate transaction of 2023, and one that "[ties] the energy giant's future to fossil fuels." As the AP puts it, the deal creates "a colossal fracking operator in West Texas."
The deal, at $253 a share, values Pioneer close to a 7% premium to its closing value Tuesday of just north of $55 billion. Pioneer shareholders will get 2.32 shares of Exxon for each Pioneer share they own. The AP explains the crux of the deal involves drilling in the Permian basin, "a massive oilfield that straddles the border between Texas and New Mexico," where nearly one-fifth of all US natural gas production took place in 2022. Pioneer holds more than 850,000 net acres in the Midland Basin, to Exxon's 570,000 net acres in the Delaware and Midland basins, two nearly contiguous fields.
The deal is expected to close early next year; once it does, Exxon's Permian production volume will more than double to 1.3 million barrels of oil equivalent per day and is projected to hit about 2 million barrels of oil equivalent per day in 2027. In a press release, Exxon writes that it believes the "transaction represents an opportunity for even greater US energy security." The Journal reads the tea leaves: "The deal puts pressure on Exxon rival Chevron and could usher in an era of megamergers as large public companies flush with cash and buoyed by institutional investors' capital snap up smaller competitors."
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