Two titans of the oil and gas industry have agreed to join forces in a merger valued at nearly $60 billion.
ExxonMobil Corp. on Wednesday announced the purchase of Pioneer Natural Resources in an all-stock transaction valued at $59.5 billion, or $253 per share, based on ExxonMobil’s closing stock price on October 5.
By combining the assets and resources of the two companies, ExxonMobil will become the dominant producer of shale oil, doubling its footprint in the Permian Basin. Together, the companies have an estimated 16 billion barrels of oil resources in the area.
The Permian Basin, located in West Texas and northeastern New Mexico, is rich in oil, gas, and potassium deposits. It comprises three parts: the eastern Midland Basin, the Central Basin Platform, and the western Delaware Basin.
The merger will combine Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins, creating an unrivaled inventory position that the company claims will result in greater energy security and strength for the U.S. economy, according to a Wednesday news release.
The marriage between Exxon and Irving-based Pioneer marks the largest merger since Exxon’s $75 billion acquisition of Mobil Corp. in 1999.
“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge,” said ExxonMobil Chairman and CEO Darren Woods. “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.”
Once the transaction closes in the first half of 2024, ExxonMobil’s Permian production volume will climb to approximately 1.3 million barrels of oil equivalent per day, or more than double 2023 volumes.
With respect to the 2,000 employees at Pioneer’s Irving headquarters, CEO Scott Sheffield told The Dallas Morning News that as part of the agreement terms, ExxonMobil will offer jobs to all of Pioneer’s local office and field operation employees.
“Obviously, we’re hoping long term that our employees will stay with ExxonMobil. It’s a great company,” Sheffield said.
As part of the agreement, Pioneer’s Irving office will remain open for at least two more years, and all employees at the Irving and Midland offices will be offered jobs with Exxon.
According to Woods, the goal is to unite the two organizations, bringing Pioneer and its Dallas-area staff together under the same umbrella as ExxonMobil.
“We view the Pioneer people as a really critical asset and part of the value proposition of bringing these two companies together,” he said, per DMN.
“Obviously, that’s going to take some time and we’re not really focused on any significant or specific date. It’s really just around the work that we needed to do to realize the advantages of bringing these two great organizations together,” Woods said.
He added that the company would focus on working with Pioneer employees to establish the best way to facilitate that union.
Although Exxon and Pioneer have reached a definitive agreement on the merger, the Boards of Directors of both companies still need to approve the transaction, which is subject to regulatory reviews and approvals.
