[1/2]The sun sets behind a crude oil pump jack at a drilling site in the Permian Basin in Loving County, Texas, U.S., November 24, 2019. Portal/Angus Mordant/File Photo Acquire License Rights
Oct 5 (Portal) – Exxon Mobil (XOM.N) is in advanced talks to acquire Pioneer Natural Resources (PXD.N). 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 the largest for Exxon since the $81 billion deal for Mobil in 1998 and would expand its presence in one of the most lucrative regions of the U.S. oil patch.
Pioneer, which had a market value of $50 billion as of Thursday, is the third-largest oil producer in the Permian Basin after Chevron Corp (CVX.N) and ConocoPhillips (COP.N). This basin, which spans parts of Texas and New Mexico, is the most sought after by the U.S. energy industry because of its relatively low cost of oil and gas production.
If negotiations conclude successfully, an agreement between Exxon and Pioneer could be reached in the coming days, the three sources said, asking not to be named because the matter is confidential.
Spokespeople for Exxon and Pioneer declined to comment. The Wall Street Journal first reported on Thursday that an agreement between the two companies was imminent.
Exxon, which has a market value of $436 billion, is the largest U.S. oil producer with an average of 3.8 million barrels of oil equivalent per day (boed) from its global operations.
Last year, the company posted record revenue of $55.7 billion thanks to high oil and gas prices and ended the year with $29.6 billion in cash.
Some of those gains have slipped this year as energy prices, which had surged after Russia’s invasion of Ukraine, have fallen amid fears of a global economic slowdown weighing on fuel demand.
Acquiring Pioneer would give Exxon more established oil production acreage that it can rely on to increase production when needed, rather than risking its money developing unproven acreage.
“It makes perfect sense,” said Bill Smead, chief investment officer of Smead Capital Management, an investment firm that manages $5.2 billion in funds. “You replenish your reserves without poking holes in the ground.”
Exxon produced about 620,000 boed in the Permian Basin in the second quarter, a record for the company. However, this was dwarfed by Pioneer’s production in the basin, which averaged 711,000 boed over the same period.
The potential deal is likely to draw political and regulatory scrutiny after the White House accused Exxon in February of making record profits at the expense of consumers.
Other major oil companies have also turned to the deal because they consider it risky to develop new acreage. Chevron Corp (CVX.N), for example, agreed in May to acquire shale oil producer PDC Energy Inc. in a stock-and-debt transaction valued at $7.6 billion.
Pioneer itself has expanded through dealmaking, including the acquisition of U.S. shale rival 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 announced he will retire at the end of this year and will be succeeded by Chief Operating Officer Richard Dealy.
Reporting by David French and Anirban Sen in New York and Sabrina Valle in Houston; Editing by Greg Roumeliotis, Lincoln Feast and Kim Coghill
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