ExxonMobile has purchased a controlling interest in the highest-producing oil field in the United States as part of a new merger with Pioneer Natural Resources.
The energy company announced the all-stock transaction on Oct. 11, which values Pioneer at $253 per share. Pioneer shareholders received 2.3234 shares of ExxonMobile for each of their shares.
Most notably, the deal allows the company to have significant influence over the Permian Basin, a petroleum and potassium-rich area that spans western Texas and southeastern New Mexico. The Texas Railroad Commission estimates that 40% of all oil production in America and 15% of natural gas production can be attributed to the Permian. It is estimated that just one portion of the Permian Basin – the Delaware Basin – could potentially produce 46.3 billion barrels of oil as well as 281 trillion cubic feet of natural gas.
“The merger combines Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins, creating the industry’s leading high-quality undeveloped U.S. unconventional inventory position,” noted ExxonMobile in the announcement. “Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian.”
ExxonMobil Chairman and CEO Darren Woods described Pioneer as 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.
Shares of Pioneer have climbed roughly 10% since The Wall Street Journal reported earlier this month that the two companies were in the final phase of reaching a deal, per CNBC.
Scott Sheffield, the CEO of Pioneer, said the merger “creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin.”
“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,” said Sheffield. “The consolidated company will maintain its leadership position, driving further efficiencies through the combination of our adjacent, contiguous acreage in the Midland Basin and our highly talented employee base, with the improved ability to deliver durable returns, creating tangible value for shareholders for decades to come.”
While the merger is unlikely to impact gasoline prices – which fluctuate based on the global market – the deal does make ExxonMobile America’s most significant producer of shale oil.
“Even as the world looks to transition to energy sources with lower emissions, Exxon’s acquisition is a bet that the combined companies can extract oil and gas from the Permian’s rich reserves at a lower cost and with technology that lessens drilling’s environmental impact,” reports The Dallas Morning News.