In a historic move that reshapes the landscape of the energy industry, Exxon Mobil Corporation has revealed a definitive agreement to acquire Pioneer Natural Resources, solidifying a strategic merger through an all-stock transaction valued at an impressive $59.5 billion.
The deal translates to approximately $253 per share based on Exxon Mobil’s closing price on October 5, 2023.
Under the terms of this significant agreement, Pioneer shareholders are slated to receive 2.3234 shares of ExxonMobil for every Pioneer share upon the closing of the transaction. This translates to an implied total enterprise value of approximately $64.5 billion, inclusive of net debt.
The merger represents the amalgamation of Pioneer’s extensive 850,000 net acres in the Midland Basin with ExxonMobil’s substantial 570,000 net acres in the Delaware and Midland Basins, forming an industry powerhouse boasting the leading high-quality undeveloped U.S. unconventional inventory position. The combined entity is expected to possess an estimated 16 billion barrels of oil equivalent resource in the Permian.
Upon the successful completion of the merger, ExxonMobil’s Permian production volume is projected to more than double, reaching 1.3 million barrels of oil equivalent per day (MOEBD) based on 2023 volumes. This volume is anticipated to escalate to approximately 2 MOEBD by the year 2027, signifying a remarkable transformation in ExxonMobil’s upstream portfolio.
ExxonMobil firmly believes that this strategic move will significantly enhance U.S. energy security, leveraging cutting-edge technologies, operational excellence, and robust financial capabilities to augment the domestic supply, ultimately benefitting the American economy and its consumers.
The merger aims to achieve a lower cost of supply production, with Pioneer’s assets expected to drive costs to less than $35 per barrel. Additionally, by 2027, over 40 percent of the total upstream volumes are projected to be short-cycle barrels, enhancing the company’s ability to respond swiftly to demand fluctuations and optimize price and volume potential.
In a proactive stance towards environmental responsibility, ExxonMobil has outlined its plans to achieve net zero Scope 1 and Scope 2 greenhouse gas emissions from its Permian unconventional operations by 2030. As part of the merger, the company plans to expedite Pioneer’s net zero emissions target by 15 years, bringing it forward to 2035. This ambitious effort will be facilitated by leveraging state-of-the-art technologies for monitoring, measuring, and addressing fugitive methane, ultimately reducing methane emissions across both companies.
Furthermore, ExxonMobil intends to bolster sustainability initiatives by optimizing the use of recycled water in Permian fracturing operations, with a target of exceeding 90 percent recycled water utilization by 2030, leveraging the enhanced operating capabilities and infrastructure resulting from this strategic merger.