Exxon Mobil Nears $60 bn Acquisition Deal for Pioneer Natural Resources

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Exxon Mobil, a global energy major, is reportedly in advanced negotiations to acquire Pioneer Natural Resources, a prominent producer in the Permian shale basin, in a deal projected to be valued at approximately $60 billion. If finalized, this acquisition would mark Exxon’s most significant since the $81 billion deal for Mobil in 1998, expanding its presence in one of the United States’ most profitable oil-producing regions, WallStreet Journal news report said.

Pioneer Natural Resources, boasting a market value of $50 billion as of Thursday, holds the position of being the third-largest oil producer in the Permian basin, trailing behind Chevron and ConocoPhillips. The Permian basin, spanning parts of Texas and New Mexico, is a highly sought-after region within the U.S. energy industry due to its relatively low extraction costs for oil and gas.

With a market value of $436 billion, Exxon currently ranks as the largest U.S. oil producer, averaging 3.8 million barrels of oil equivalent per day (boed) from its global operations. Last year, the company recorded a record-breaking profit of $55.7 billion, attributed to high oil and gas prices, concluding the year with $29.6 billion in cash, Reuters news report said.

However, the company faced a decline in profits this year as energy prices, which surged after Russia’s invasion of Ukraine, have decreased due to concerns regarding a global economic slowdown impacting fuel demand. Acquiring Pioneer would furnish Exxon with more proven oil-producing land, reducing risks associated with developing unproven acreage and providing a dependable means to boost production when necessary.

In the second quarter, Exxon achieved a record 620,000 boed production in the Permian basin. Nevertheless, this was overshadowed by Pioneer’s impressive output, averaging 711,000 boed in the same period.

Anticipated to attract political and regulatory scrutiny, the potential deal comes after the White House accused Exxon in February of attaining substantial profits at the expense of consumers. Other prominent players in the oil industry are also turning to strategic mergers and acquisitions due to the perceived risks associated with drilling new acreage. Chevron, for instance, agreed in May to acquire shale producer PDC Energy in a transaction valued at $7.6 billion, encompassing stock and debt components.

Pioneer Natural Resources has also pursued growth through strategic acquisitions, including the notable purchases of U.S. shale rivals DoublePoint Energy for $6.4 billion in 2021 and Parsley Energy for $7.6 billion in 2020. The Dallas-based company is led by industry veteran Scott Sheffield, who has announced his retirement at the end of this year, with Chief Operating Officer Richard Dealy set to succeed him.

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