Exxon Considers Buying U.S. Shale Giant

ExxonMobil has held early informal talks about potentially acquiring the largest pure-play shale producer, Pioneer Natural Resources, The Wall Street Journal has reported, quoting sources with knowledge of the matter.

Exxon is looking to boost additionally its position in the U.S. shale patch and it has said for years that the Permian basin would be its key priority area for investments and growing production in the coming years.

In December, Exxon said in its latest corporate plan that more than 70% of capital investments by 2027 would be deployed in strategic developments in the U.S. Permian Basin, Guyana, Brazil, and LNG projects around the world.  

Pioneer Natural Resources, whose market capitalization was $49 billion as of market close on Thursday, is the biggest oil producer in the Permian and the largest pure-shale player in the United States.

Contacts between Exxon and Pioneer have been informal only at this stage, and there is no guarantee that the informal talks could turn into formal negotiations, the Journal's sources said. Exxon could also decide to pursue an acquisition of another company, and the U.S. supermajor has talked about a deal with at least one other firm, the sources added.

At the end of February, Pioneer Natural Resources said in a brief statement that "the Company is not contemplating a significant business combination or other acquisition transaction." 

At any rate, if Exxon and Pioneer were to proceed to formal negotiations and potentially reach a deal on an Exxon acquisition, this would be the biggest for the U.S. supermajor since the megadeal of 1999 when Exxon and Mobil merged to create the oil giant.   

The rise in oil prices and the need for companies to secure primary drilling locations in the Permian have recently prompted activity in deal-making in the shale patch.

Just last week, Ovintiv struck a deal to buy untapped oil and gas assets in the Permian from EnCap Investments for $4.3 billion.  

By Tsvetana Paraskova for Oilprice.com

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