Exxon Mobil buys Pioneer Natural in $ 59.5 billion deal with energy prices surging

Exxon Mobil is buying Pioneer Natural Resources in an all-stock deal valued at $ 59.5 billion, its largest buyout since acquiring Mobil two decades ago, and creating a colossal fracking operator in West Texas. Including debt, Exxon is committing about $ 64.5 billion to the acquisition, leaving no doubt of the Texas energy company’s commitment to fossil fuels as energy prices surge.

Pioneer shareholders will receive 2.32 shares of Exxon for each Pioneer share they own. Exxon purchased XTO Energy in 2009 for approximately USD 36 billion. In the late 1990s, the merger between Exxon and Mobil was valued at around USD 80 billion. The deal with Pioneer Natural expands Exxon’s presence in the Permian basin, a massive oilfield that straddles the border between Texas and New Mexico. Drilling the Permian accounted for 18 per cent of all US natural gas production last year, according to the US Energy Information Administration.

Pioneer’s more than 850,000 net acres in the Midland Basin will be combined with Exxon’s 570,000 net acres in the Delaware and Midland Basin, nearly contiguous fields that will allow the combined company to trim costs. That is a big driver of the deal. Natural gas rigs in operation have declined over 26 per cent in the US since the start of the year, according to government data, largely due to the rising costs for drilling materials and labour over the past two years.

Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production, Exxon Mobil CEO Darren Woods said of Pioneer in a prepared statement. The company will have an estimated 16 billion barrels of oil equivalent in the Permian. Once the deal closes, Exxon Permian production volume will more than double to 1.3 million barrels of oil equivalent per day, based on 2023 volumes. It’s expected to climb to about 2 million barrels of oil equivalent per day in 2027.