ExxonMobil Becomes The Biggest Big Dog In The Permian Basin

The process of consolidation in the U.S. shale business took a giant leap Wednesday with ExxonMobil’sXOM +0.9% announcement it will merge with Permian Basin pure-play company Pioneer Natural ResourcesPXD 0.0% in an all-stock deal valued at $59.5 billion, or $253 per share. Exxon said in a release that the implied total value of the enterprise is $64.5 billion, including net debt.

A Deal That Checks Off All The Boxes

ExxonMobil CEO Darren Woods said that this long-anticipated merger with Pioneer ticks off a number of key boxes for any company seeking to grow through mergers and acquisitions in the shale space: An outstanding work force, long-term value creation, a high volume of tier-one acreage that is highly contiguous to Exxon’s own acreage base, and opportunities to create value through efficiency gains and economies of scale.

“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” said Woods. “Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production.”

The merger with ExxonMobil will no doubt become seen as the crowning achievement of Pioneer CEO Scott Sheffield, who announced in April that he would retire from the company at the end of this year. Sheffield had retired as CEO once before, in 2016, before returning to the position in 2019 to lead the company through its transition from a company with a wide array of domestic and international assets to a pure-play Permian Basin producer.

In the release, Sheffield emphasized the advantages that would now accrue to employees and shareholders due to the combined company’s size and scale. “The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” Sheffield said. “As part of a global enterprise, Pioneer, our shareholders and our employees will be better positioned for long-term success through a size and scale that spans the globe and offers diversity through product and exposure to the full energy value chain.”

READ MORE FROM THE SOURCE: https://www.forbes.com/sites/davidblackmon/2023/10/11/exxonmobil-becomes-the-biggest-big-dog-in-the-permian-basin/