Exxon in advanced talks for $60 billion acquisition of Pioneer, sources say


Oct 5 (Reuters) – Exxon Mobil (XOM.N) is in advanced talks to acquire Pioneer Natural Resources (PXDN.N) in a deal that could value the Permian shale basin producer at about $60 billion, People familiar with the matter said. Thursday.

The acquisition would be Exxon’s largest since its $81 billion deal for Mobil in 1998 and would expand its footprint in one of the most lucrative areas of the U.S. oil patch.

Pioneer shares rose nearly 12% to $240.47 in premarket trading Friday, while Exxon slipped 1.7%.

Pioneer, which had a market value of $50 billion as of Thursday, is the third-largest producer of oil in the Permian Basin behind Chevron Corp (CVX.N) and ConocoPhillips (COP.N). That basin, which spans parts of Texas and New Mexico, is one of the most coveted by the U.S. energy industry because of the relatively low cost of extracting oil and gas.

If talks conclude successfully, an agreement between Exxon and Pioneer could be reached in the coming days, three of the sources said, speaking on condition of anonymity because the matter is confidential.

Spokespeople for Exxon and Pioneer declined to comment. The Wall Street Journal first reported Thursday that a deal was nearing a deal between the two companies.

Exxon, which has a market value of $436 billion, is the largest US oil producer with an average of 3.8 million barrels of oil equivalent per day (boed) from its global operations.

Last year it earned a record $55.7 billion due to higher oil and gas prices and ended the year with $29.6 billion in cash.

Some of those profits have been eroded this year as energy prices, which had risen after Russia’s invasion of Ukraine, have fallen on concerns that the global economic slowdown will hit fuel demand.

The acquisition of Pioneer will give Exxon more established oil-producing land that it can rely on to increase production when needed, rather than risking its cash on developing unproven acreage.

“It makes complete sense,” said Bill Smeed, chief investment officer of Smeed Capital Management, an investment firm that manages a $5.2 billion fund. “You replenish your reserves without drilling holes in the ground.”

Exxon produced nearly 620,000 boe in the Permian Basin in the second quarter, a record for the company. Still, this was less than Pioneer’s production in the basin, which averaged 711,000 boe over the same period.

The potential deal is sure to face political and regulatory scrutiny, after the White House in February accused Exxon of reaping bumper profits at the expense of consumers.

Other oil companies are also turning to dealmaking as they find drilling in new acreage risky. For example, Chevron Corp (CVX.N) agreed in May to acquire shale producer PDC Energy Inc in a $7.6 billion stock-and-debt transaction.

Pioneer has grown itself through dealmaking, including the acquisitions of US 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 said he will retire at the end of the year and will be replaced by Chief Operating Officer Richard Daly.

Reporting by David French and Anirban Sen in New York and Sabrina Vale in Houston; Editing by Greg Roumeliotis, Lincoln Feast and Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.

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Anirban Sen is editor in charge of US M&A at Reuters in New York, where he leads coverage of the largest deals. Having started at Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter at several of India’s leading business news outlets, including The Economic Times and Mint. Anirban re-joined Reuters in 2019 as editor in charge of finance, to lead a team of journalists covering everything from investment banking to venture capital. Anirban holds a degree in History from Jadavpur University and a Post Graduate Diploma in Journalism from the Indian Institute of Journalism and New Media. Contact:+1 (646) 705 9409

American energy correspondent focused on covering the global operations of major oil companies out of Houston. Sabrina previously worked at other publications, including Bloomberg and Business Week in Rio de Janeiro and The Washington Post in DC. Speaks English, French, Portuguese, Spanish and Italian. Contact: [email protected]

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