Exxon Mobil Corporation and Pioneer Natural Resources have reached a historic agreement for ExxonMobil to acquire Pioneer in an all-stock transaction valued at a staggering $59.5 billion. This transformative deal is set to redefine the energy landscape and solidify ExxonMobil’s position in the Permian Basin.
According to official statements, the deal is going to be an all-stock deal, meaning that no cash will be involved. Each share of the other company, Pioneer, will be traded for 2.3234 shares of ExxonMobil. The value of each share in this deal is $253, determined by how much ExxonMobil shares were worth on October 5.
ExxonMobil’s Chairman and CEO, Darren Woods, praised Pioneer as a dominant force in the Permian Basin, emphasizing the unique assets and profound industry expertise held by Pioneer. Woods anticipates that the combined strengths of the two companies will generate long-term value surpassing what either could achieve independently. Pioneer’s Chief Executive Officer, Scott Sheffield, echoed Woods’ sentiments, highlighting that the merger would result in a diversified energy giant boasting the largest footprint of high-return wells in the Permian Basin.
The deal, valued at approximately $64.5 billion, including net debt, is seen as strategically beneficial, given the complementary nature of Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins. After the merger, ExxonMobil plans to produce a lot more oil in the Permian Basin, reaching 1.3 million barrels a day by 2023 and possibly 2 million barrels a day by 2027. This is seen as a significant move, similar to when ExxonMobil bought XTO Energy in 2010. They believe that buying Pioneer will be cost-effective, with each barrel of oil costing less than $35.
ExxonMobil also likes that Pioneer’s land fits well with theirs, allowing them to drill longer, more efficient wells. This merger, pending approval from regulators, could make ExxonMobil a major player in the energy industry, especially in the Permian Basin. Experts are keeping a close eye on how this move will shape ExxonMobil’s future dominance in energy. This also raises a grave concern regrading the climate change and harm to other natural resources .