Exxon buying Pioneer in largest U.S. upstream deal in 25 years

byMatthew Keillor, Editor, Enverus Intelligence

After months of rumors and speculation, ExxonMobil announced an agreement to acquire Pioneer Natural Resources in an all-stock transaction valued at $64.5 billion, including assumed net debt. The deal was first rumored in April and reported to be imminent in early October by The Wall Street Journal. It is the largest corporate acquisition in U.S. upstream oil and gas since Exxon acquired Mobil in 1998 for $82.5 billion, slightly beating out Occidental Petroleum’s $57 billion acquisition of Anadarko Petroleum in 2019. The supermajor said the Pioneer transaction, expected to close in 1H24, will more than double its Permian footprint and is expected to generate double-digit returns. “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 in excess of what either company is capable of doing on a standalone basis,” Exxon chairman and CEO Darren Woods said. “Their Tier 1 acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production. As importantly, as we look to combine our companies, we bring together environmental best-practices that will lower our environmental footprint and plan to accelerate Pioneer’s net-zero plan from 2050 to 2035.”

Source: ExxonMobil 10/11/23 presentation via Enverus docFinder

Midland Basin-focused Pioneer had around 856,000 largely contiguous net acres and proved reserves of nearly 2.4 Bboe at YE22, according to its 2022 annual report, and in Q2 it produced 711,000 boe/d (52% oil). The acreage, of which nearly 99% targets the Spraberry and Wolfcamp, boasts about 6,300 net locations of high-quality drilling inventory and around 6,400 gross operated producing wells as of March, according to Enverus Intelligence® | Research’s Operator Profile of the company, available to EIR subscribers.

Combined Permian drilling inventory of 15-20 years, targeting 16 Bboe

Exxon said it has 570,000 net acres in the Delaware and Midland basins. As of March, the supermajor had nearly 12,500 gross operated producing wells in the U.S., of which 1,584 were in the Midland Basin, according to EIR’s Operator Profile. Exxon produced about 620,000 boe/d in the Permian in Q2, out of a nearly 1.2 MMboe/d (66% liquids) U.S. total and global production of 3.6 MMboe/d (65% liquids).

Source: ExxonMobil 10/11/23 presentation via Enverus docFinder

The supermajor said the transaction will result in a combined Permian resource base of more than 16 Bboe with an estimated drilling inventory of 15-20 years and total Permian production of 1.3 MMboe/d. It anticipates that its production from the region will reach around 2 MMboe/d (over 75% liquids) by 2027. Exxon expects a cost of supply of less than $35/boe from Pioneer’s assets and total annual average synergies of $2 billion over the next decade. It added that short-cycle barrels will comprise more than 40% of total upstream volumes by 2027, and Pioneer’s contiguous acreage will allow it to drill laterals of up to 4 miles.

Expects cost of supply from Pioneer assets below $35/boe, synergies of $2B/year

Upon closing, Pioneer shareholders will receive 2.3234 Exxon shares for each Pioneer share. The consideration represents an 18% premium to Pioneer’s undisturbed closing price of $214.96 on Oct. 5—the WSJ article was published after market close that day—and a 9% premium to its 30-day volume-weighted average price. Pioneer had net debt of $5.2 billion at the end of Q2 and $91 million of cash on hand. Exxon had nearly $37.6 billion in long-term debt at the end of Q2 and over $29.5 billion of cash on hand.

Operator Profiles from Enverus Intelligence® | Research provide comprehensive information on a plethora of U.S. upstream companies based on proprietary Enverus data and analytics. Check out the Operator Profiles for Exxon and Pioneer (available to EIR subscribers).

About Enverus Intelligence Publications
Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector.

Matthew Keillor, Editor, Enverus Intelligence

Matthew Keillor, Editor, Enverus Intelligence

Matthew Keillor joined Enverus in 2019. As part of the Publications team, he covers oil and gas commodity markets, renewable energy and upstream, financial and M&A activity in the oil and gas sector. Matthew is a graduate of Texas State University.

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