Exxon to Become US Shale Oil King in $60 Billion Pioneer Deal.

The acquisition would make Exxon the undisputed leader in the Permian Basin, with an output of more than many OPEC nations.

by Motoni Olodun

Exxon Mobil Corp. is close to sealing a deal to buy Pioneer Natural Resources Co., a leading shale oil producer, in what could be the biggest takeover of 2023, according to sources familiar with the matter. The deal, which could be worth as much as $60 billion, is expected to be announced in the coming days unless there are unforeseen complications.

The acquisition would make Exxon the undisputed leader in the Permian Basin, the most prolific oil field in the US, with an output of about 1.2 million barrels daily, more than many OPEC nations. It would also give Exxon access to decades of low-cost, low-risk crude to feed its massive refinery network on the Gulf Coast.

The deal would mark a major comeback for Exxon, which has faced criticism from investors and environmentalists for its lagging performance and carbon footprint. The company’s finances took a hit during the pandemic as oil prices plunged, and it ramped up spending on large global projects. Exxon had to borrow billions of dollars to pay dividends and was briefly removed from the Dow Jones Industrial Average last year.

However, after cutting costs, reducing debt, and reaping the benefits of its investments, Exxon’s profits surged to a record $59 billion in 2022. The company’s stock also gained over 80% last year, giving it the financial firepower to pursue a potential game-changing deal with Pioneer.

Pioneer is one of the most successful independent explorers in the Permian Basin, with a market value of about $50 billion. The company has been praised for its operational efficiency, environmental stewardship, and shareholder returns. Pioneer’s founder and CEO Scott Sheffield, who has worked in the Permian since the 1970s and is widely regarded as an architect of the shale boom, announced his retirement plans earlier this year.

The deal talks between Exxon and Pioneer came amid a wave of consolidation in the US oil industry, as companies sought to gain scale and efficiency in the face of volatile markets and rising pressure to curb emissions. Chevron Corp., ConocoPhillips, and Devon Energy Corp. are among the major players that have snapped up smaller rivals in recent months.

Analysts said the combination of Exxon and Pioneer would create a formidable force in the Permian Basin, with significant synergies and cost savings. They also said the deal would signal Exxon’s confidence in the long-term outlook for oil demand despite the challenges posed by climate change and renewable energy.

The deal could face some regulatory hurdles, as the Biden administration has vowed to crack down on fossil fuel production and emissions. However, some experts said the deal could also offer some environmental benefits, as Exxon has pledged to reduce its carbon intensity and invest in carbon capture and storage technologies.

Exxon and Pioneer declined to comment on the deal rumors, saying they do not respond to market speculation. The sources who spoke to the media asked not to be identified because the talks are confidential.

The deal, if completed, would be a historic moment for the US oil industry and a testament to the resilience and innovation of shale oil producers. It would also show that Exxon, one of the world’s oldest and largest energy companies, is unafraid to adapt and evolve in a changing world.

Source: Energy Voice

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