Exxon Nears Mega Deal: Exxon Mobil (XOM.N) is in talks to buy Pioneer Natural Resources (PXD.N). If the deal happens, the Permian shale basin icon will be valued at around $60 billion, a steep price.
The potential purchase would be Exxon’s largest since its $81 billion merger with Mobil in 1998. It means a strategic move into the profitable U.S. oil area, particularly the Permian region.
On Thursday, Pioneer’s stock market value was $50 billion, ranking it the third-largest Permian Basin oil provider. Only ConocoPhillips (COP.N) and Chevron Corp (CVX.N) are larger. This valley in Texas and New Mexico is attractive as it’s the most sought-after area in the U.S. energy business and has cost-effective oil and gas extraction.
Three anonymous sources stated that successful secret negotiations could lead to an imminent deal between Exxon and Pioneer.
Exxon and Pioneer remained silent, leading to rumours after The Wall Street Journal reported the deal on Thursday.
Exxon, a $436 billion company, is the largest U.S. oil producer. Its global operations produce an average of 3.8 million dollars per year. Last year, due to high oil and gas prices, it earned a record $55.7 billion and ended with $29.6 billion in cash savings.
Energy prices rose due to Russia’s role in Ukraine. This year, fears of a global economic slowdown affecting fuel demand caused prices to drop, ending the financial gain.
Adding Pioneer to Exxon’s portfolio would provide reliable oil-producing land and be a wiser investment than unproven field development. Bill Smead was right: “You replenish reserves without holes in the ground.” This strategy aligns with that idea. Bill Smead is the CIO of Smead Capital Management. He manages a $5.2 billion investment collection.
Exxon’s Q2 work in the Permian region resulted in a record high production of around 620,000 boed. Still, Pioneer’s production during the same time, averaging 711,000 boed, was bigger than this accomplishment.
As the corporate symphony pieces align, the planned acquisition will attract attention from politicians and regulators. The White House’s claim that Exxon profited at customers’ expense complicates the talks.
This consolidation trend aligns with the industry’s more significant shift towards strategic alliances over venturing into unknown territory. Chevron Corp. (CVX.N) agreed to purchase shale expert PDC Energy Inc. for $7.6 billion in May. This deal was a clever mix of stock and debt.
Pioneer has made intelligent choices as it has risen. Its position improved with acquisitions such as the $6.4 billion deal with DoublePoint Energy in 2021 and the $7.6 billion deal with Parsley Energy in 2020.
This business dance is led by industry expert Scott Sheffield, who oversees Dallas-based Pioneer. By year-end, COO Richard Dealy replaces Sheffield, who is departing. As the curtain rises on this thrilling act, the corporate dance’s end eagerly awaits its cue on the world stage.
Our Reader’s Queries
Is XOM going to buy PXD?
ExxonMobil and Pioneer Natural Resources have come together in an all-stock transaction, as announced by the two companies. The deal involves ExxonMobil acquiring Pioneer in a definitive agreement.
What is the Exxon merger deal?
Exxon has put forward a proposal to acquire Pioneer in a deal worth $59.5 billion, which would result in Exxon becoming the biggest oil producer in the Permian Basin of West Texas and New Mexico – the most active oil field in the United States. This all-stock takeover would be a significant move for Exxon and could have a major impact on the oil industry.
Is Chevron’s Mega oil Deal more expensive than Exxon?
Despite generating twice as much annual cash as Hess, Pioneer is valued at just 6.35 times its 12-month cash flow in all-stock transactions, while Hess is valued at 11.65 times. As a result, Chevron is paying almost double the price for every dollar of acquired cash flow compared to Exxon.
Exxon is reportedly in discussions to acquire a shale producer based in Irving, Texas for over $250 per share. Sources familiar with the matter have stated that an all-stock agreement may be announced as early as Wednesday. The deal has not yet been made public and the sources have requested anonymity.