According to people familiar with the situation, Exxon Mobil is in advanced talks to buy Pioneer Natural Resources in a deal that could value the producer of the Permian shale field at roughly $60 billion.
The acquisition would increase Exxon’s presence in one of the most lucrative areas of the American oil field and be the company’s largest since its $81 billion merger for Mobil in 1998.
Pioneer, which had a market value of $50 billion as of Thursday, is the third-largest oil producer in the Permian area, behind ConocoPhillips and Chevron Corp. That basin, which crosses sections of Texas and New Mexico, is the most sought-after in the American energy sector due to how inexpensive it is to extract oil and gas there.
The three sources, who asked not to be named because the situation is private, indicated that if the talks go well, an agreement between Exxon and Pioneer might be achieved in the upcoming days.
Exxon and Pioneer denied requests for comment. A partnership between the two businesses was originally mentioned in a report published on Thursday by The Wall Street Journal.
Exxon, which has a market value of $436 billion, produces an average of 3.8 million barrels of oil equivalent per day (boed) from its global activities, making it the largest oil producer in the United States.
Thanks to strong oil and gas prices, it made a record $55.7 billion last year and finished the year with $29.6 billion in cash.
Some of those gains have decreased this year due to falling energy prices brought on by worries about a worldwide economic downturn impacting fuel demand. Energy costs increased following Russia’s invasion of Ukraine.
Instead of risking its money on the development of unproven areas, Exxon would gain access to more oil-producing territory through the acquisition of Pioneer.
Bill Smead, chief investment officer of Smead Capital Management, an investment company that oversees $5.2 billion in assets, declared that “it makes perfect sense.” You can restock without digging holes in the earth, according to the saying.
Exxon produced a record-breaking 620,000 boed in the Permian basin during the second quarter. Even yet, Pioneer’s output in the basin, which averaged 711,000 boed over the same time period, exceeded this.
After the White House accused Exxon in February of making huge profits at the expense of consumers, the proposed merger is expected to come under political and regulatory scrutiny.
Due to the risk involved in drilling new property, other large oil companies have also started to engage in dealmaking. For instance, Chevron Corp decided in May to pay $7.6 billion in stock and debt to acquire shale producer PDC Energy Inc.
Through strategic acquisitions, such as those of American shale rivals DoublePoint Energy for $6.4 billion in 2021 and Parsley Energy for $7.6 billion in 2020, Pioneer has grown.
The CEO of the Dallas-based business, Scott Sheffield, has announced that he will retire at the end of this year and be succeeded by Richard Dealy, his chief operating officer.