Joe Raedle
Exxon Mobil (NYSE:XOM) is in talks to acquire Pioneer Natural Resources (NYSE:PXD) for more than $250 a share.
An all-stock deal may be announced as soon as Wednesday, according to a Bloomberg report, which cited people familiar. At the $250 a share price, Pioneer Natural (PXD) would be valued at more than $58 billion.
A final agreement has yet to be reached and deal terms may still be alterted or no deal may come to fruition, according to Bloomberg.
A $250 share price for Pioneer Natural (PXD) would present a 16% premium to the Permian shale producers’s closing price on Thursday, before PXD shares jumped 10% on Friday after a WSJ report the Exxon was closing on a deal to acquire the company.
The news comes after the WSJ first reported in early April that Exxon (XOM) held preliminary, informal talks with Pioneer Natural Resources (PXD) about a possible acquisition. Exxon also discussed a potential tie-up with at least one other company as it seeks a blockbuster deal in the shale.
Pioneer Natural (PXD) has a market cap of $55 billion. An acquisition of Pioneer wouldd be Exxon’s (XOM) largest since its purchase of Mobil in 1999. Exxon has a market cap of $442 billion.
For Exxon (XOM), a deal would add valuable acreage near some of its own fields and make it the dominant producer in the Permian Basin; Pioneer (PXD) is the Permian’s largest operator at 9% of gross production while Exxon is no. 5 at 6% of gross production.
Exxon (XOM), which earned a record $55.7B profit in 2022, had accumulated nearly $30B cash at the end of June 30.
The “logic of consolidation in the highly fragmented Permian shale remains compelling,” with significant gains from economies of scale, Citi analyst Alastari Symes said of the deal last week.
A Pioneer Natural (PXD) acquisition would be the second in recent months for Exxon (XOM) after it agreed to buy Denbury Resources (DEN) for almost $5 billion in all-stock deal in July.
A Pioneer Natural (PXD) deal might jumpstart M&A in the oil patch, according to analysts. Chevron (CVX) was interested in Occidental Petroleum (OXY), one of the largest producers in the Permian basin, in the early part of this year, though the oil giant’s interest has waned in recent months, according to a WSJ report on Friday.
Chevron (CVX) has moved on to other, smaller targets after Occidental (OXY), according to the WSJ report. Chevron CEO Mike Worth is said to be looking to do a large deal before he retires. ConocoPhillips (COP) is also looking at potential deals in the shale patch, with smaller producers signaling they are for sale a the right prices.
Other Permian producers also saw their shares gain on Friday following the WSJ news on a possible Pioneer (PXD) deal, including Permian Resources (PR)+4.8%, Diamondback Energy (FANG) +4.2%, Coterra Energy (CTRA) +2.6% and Devon Energy (DVN) +2%.
