ExxonMobil Corporation and Texas-based hydrocarbon explorer, Pioneer Natural Resources, have announced a definitive agreement for Exxon to acquire Pioneer in an all-stock transaction valued at US$59.5 billion, equivalent to US$253 per share based on Exxon’s closing price on October 5, 2023. According to Forbes, this deal is the largest merger for the oil major, since that of Exxon and Mobil in the 90s, which was valued at US$81 billion.
Pioneer shareholders will receive 2.3234 shares of Exxon for each Pioneer share at closing, bringing the implied total enterprise value of the transaction, including net debt, to approximately US$64.5 billion.
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This merger combines Pioneer’s more than 850,000 net acres in the Midland Basin with Exxon’s 570,000 net acres in the Delaware and Midland Basins, creating the industry’s leading high-quality undeveloped US unconventional inventory position. Together, the two companies will have an estimated 16 billion barrels of oil equivalent resources in the Permian. At the close of the transaction, Exxon’s Permian production volume is expected to more than double to 1.3 million barrels of oil equivalent per day (MOEBD), based on 2023 volumes, and is projected to increase to approximately 2 MOEBD in 2027.
Exxon said it views the transaction as an opportunity for greater US energy security, leveraging advanced technologies, operational excellence, and financial capability to enhance domestic supply, benefiting the American economy and consumers.
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According to Chairman and Chief Executive Officer (CEO) Darren Woods, “Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. The combined capabilities of our two companies will provide long-term value creation, well beyond what either company can achieve on a standalone basis.”
Exxon said too that the merger aligns with its commitment to environmental best practices, with plans to accelerate Pioneer’s net-zero emissions goal from 2050 to 2035. It also represents an opportunity to lower methane emissions and increase the use of recycled water in Permian fracturing operations.
Scott Sheffield, CEO of Pioneer, expressed optimism about the merger, noting that it “creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin.” The combined company is expected to provide tangible value for shareholders for decades to come.
The merger is expected to close in the first half of 2024, subject to customary regulatory reviews, approvals, and Pioneer shareholder consent. The Boards of Directors of both ExxonMobil and Pioneer have unanimously approved the transaction, marking a transformative step in the energy industry landscape.
