Exxon Mobil is expected to reveal its acquisition of American rival Pioneer Natural Resources for almost $60 billion, establishing itself as the dominant force in the biggest U.S. oilfield. Exxon will benefit from a decade of cost-effective production thanks to this strategic move, according to individuals with knowledge of the situation, and the company, which was valued at $442 billion on Tuesday, intends to make an all-stock offer for Pioneer at a price above $250 per share. Please take note that the specifics are still private and that the sources would prefer anonymity.
Pioneer’s stock, which closed Tuesday at $237.41, increased 2.7% in premarket trading to reach $244. Exxon’s stock, meanwhile, saw a modest decline.
This represents the largest acquisition of the year for any business and the largest for Exxon since its $81 billion purchase of Mobil Oil in 1998.
Exxon declined to comment on the “market speculation,” while Pioneer took some time to react to a request for a remark.
As a result of this agreement, four significant U.S. oil firms will control a sizable chunk of the Permian Basin’s massive oilfield infrastructure and shale field.
According to antitrust experts, Exxon and Pioneer had a strong chance of concluding their agreement despite the intensive scrutiny it would receive, as reported by Reuters last week. Their justification for this was their combined presence, which would account for a very minor portion of the worldwide oil and gas market.
This proposed transaction comes after Exxon spent the last two years trying to recover from substantial losses and significant debts. They were able to do this by cutting expenses, selling off a lot of assets, and taking advantage of higher energy prices as a result of Russia’s invasion of Ukraine.
Exxon’s CEO, Darren Woods, resisted pressure from investors and the government to switch to renewable energy, a course taken by European oil majors, with steady resolve. His dedication to an oil-dependent strategy earned harsh criticism as climate issues became more pressing.
The business’s decision paid off as it turned a record-breaking $56 billion profit last year after suffering a $22 billion loss due to the COVID-19 epidemic just two years before.
Exxon Mobil properly placed aside almost $30 billion in cash for prospective purchases, as predicted by analysts, as part of its huge earnings from the spike in oil prices.
One of the most notable oil industry success stories to come out of the shale revolution is Pioneer. In little more than a decade, this shift propelled the United States from being a big oil importer to the top producer in the world.
It comes in third place behind ConocoPhillips (NYSE: COP) and Chevron Corp (NYSE: CVX) as the largest oil producer in the Permian basin. Their production costs, which average roughly $10.50 per barrel for oil and gas, are remarkably low.
Under the direction of CEO Scott Sheffield, the business swiftly grew and made substantial acquisitions in 2021, notably the billion-dollar-plus deals for DoublePoint Energy and Parsley Energy (NYSE: PE).
Exxon’s proposed acquisition would surpass Shell’s (LON: SHEL) $53 billion acquisition of BG Group in 2016, establishing Shell as the market leader for liquefied natural gas. The price of the sale was earlier this Tuesday, published by Bloomberg News.
Exxon and Denbury Inc., a small American oil business with a network of carbon dioxide pipelines and underground storage, came to an all-stock, $4.9 billion agreement in July. The goal of this transaction was to support Exxon’s developing low-carbon industry.
The largest U.S. oil producer first put forth an all-cash offer for Denbury but changed to an all-stock agreement at the very last minute. This adjustment was made in response to the target company’s rising market value throughout the negotiating process and investors’ desire to profit from any prospective increase in Exxon’s shares.
After a sharp decline in early 2020 with an end of rate hike cycle, due to a collapse in oil and gas prices, the stock value of the oil firm achieved a stunning recovery. Recent contributions from Shubhendu Deshmukh in Bengaluru, Anirban Sen in New York, and Sabrina Valle in Houston helped Exxon’s shares achieve a record high of $120 per share. Gary McWilliams authored this piece, which Rashmi Aich and Jamie Freed edited.
