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Exxon is in talks to acquire Pioneer Natural Resources in a deal that could be worth up to $60 billion, the Wall Street Journal has reported, citing unnamed sources.
This would be the biggest deal for Exxon since the merger with Mobil back in the 1990s and would make the supermajor the dominant producer in the Permian.
Pioneer, according to the report, has a market cap of about $50 billion. Exxon, for its part, has a market cap of $436 billion and a lot of cash to spend on industry consolidation after the record-breaking 2022.
Reuters also cited unnamed sources as saying the deal was imminent, noting that Pioneer is the third-largest oil producer in the Permian, after Chevron and ConocoPhillips.
Both reports say that the deal could close within the next few days. It is bound to attract a lot of regulatory and political attention due to its potential size.
"It makes complete sense," Bill Smead, chief investment officer of Smead Capital Management, told Reuters. "You replenish your reserves without poking holes in the ground."
Indeed, consolidation has become the preferred method of growth for the large players in the U.S. shale patch. The last two years saw a string of large deals, including Occidental’s acquisition of Anadarko for some $38 billion. Pioneer also grew through acquisitions, buying Parsley Energy for over $7 billion in 2020 and DoublePoint Energy for over 6 billion in 2021.
Record profits generated last year will likely continue to fuel the consolidation drive in the shale industry as it seeks to make more with less and with lower risk.
Indeed, an acquisition of Pioneer would add over 700,000 barrels of oil equivalent in production to its Permian output, per data cited by Reuters. Exxon’s own output in the Permian, as of the second quarter of the year, was 620,000 barrels of oil equivalent daily.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.