ExxonMobil completes $59.5bn acquisition of Pioneer Natural Resources to double Permian Basin footprint

Exxon Mobil Corporation (NYSE: XOM) has officially closed its acquisition of Pioneer Natural Resources Company (NYSE: PXD) in an all-stock transaction valued at $59.5 billion, which includes an enterprise value of $64.5 billion inclusive of net debt. This strategic move more than doubles ExxonMobil’s footprint in the Permian Basin, positioning the company as the leader in this critical U.S. unconventional resource area.

Details of the Transaction and Expansion Impact

The merger combines Pioneer’s substantial 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 acres in both the Delaware and Midland Basins. The combined assets cover more than 1.4 million net acres with an estimated 16 billion barrels of oil equivalent resources. As a result, ExxonMobil’s daily production in the Permian is expected to more than double to 1.3 million barrels of oil equivalent per day (MOEBD) based on 2023 volumes, with a projected increase to approximately 2 MOEBD by 2027.

ExxonMobil finalizes its acquisition of Pioneer Natural Resources for $59.5 billion, significantly expanding its Permian Basin operations.

Enhanced Environmental Goals and Production Efficiency

A key component of the merger is the acceleration of environmental goals, with ExxonMobil planning to advance Pioneer’s 2050 net-zero Permian goal to 2035. This initiative includes achieving net-zero Scope 1 and Scope 2 greenhouse gas emissions from its Permian unconventional operations by 2030. Additionally, the merger will utilize combined operating capabilities to increase the use of recycled water in Permian fracturing operations to more than 90% by 2030.

Leadership Perspectives on the Merger

ExxonMobil Chairman and CEO, Darren Woods, stated, “This premier, tier-one asset is a natural fit for our Permian portfolio and gives us a greater opportunity to deploy our technology and deliver operating and capital efficiency for long-term shareholder value.” He also emphasized the merger’s benefits to the U.S. energy security and economy.

Pioneer Natural Resources CEO, Scott Sheffield, remarked, “The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin.”

Economic and Regulatory Aspects

The transaction, unanimously approved by both companies’ Boards, is subject to regulatory and Pioneer shareholder approvals, with an expected completion in the first half of 2024. The deal is anticipated to be immediately accretive to ExxonMobil’s earnings and cash flow, reinforcing its economic position and contributing to U.S. energy security.

The merger between ExxonMobil and Pioneer Natural Resources represents a transformative move within the oil and gas industry, significantly enhancing ExxonMobil’s capabilities in the Permian Basin. The strategic integration of resources and advanced environmental initiatives is expected to yield high returns while also addressing critical sustainability goals. This merger sets a new benchmark for operational efficiency and environmental responsibility in the sector.