According to media reports, Exxon Mobil Corp. has been in preliminary talks with Pioneer Natural Resources Co. about a potential acquisition of the fracking company. The discussions are reportedly informal, and no formal process has been put in place
The Wall Street Journal also reported that Exxon has explored the possibility of a tie-up with at least one other company as it searches for a significant shale deal.
Pioneer, one of the largest independent US oil producers, has experienced a nearly 9% drop in shares this year. Meanwhile, Exxon’s shares have gained 4% this year, and the company has a market capitalization of $468 billion.
While any potential deal between Exxon and Pioneer is not expected to materialize until later this year or next year, this move could mark a significant step for Exxon.
If Exxon Mobil Corp. were to successfully acquire Pioneer Natural Resources Co., it would mark the company’s most significant acquisition since its merger with Mobil Corp. in 1999. With Pioneer boasting a market capitalization of $48.29 billion, the acquisition would represent a substantial investment for Exxon.
However, such a move would also have strategic benefits for the oil giant, particularly in solidifying its position in the Permian Basin of West Texas and New Mexico. Exxon considers this region to be crucial to its growth strategy, and an acquisition of Pioneer would help to reinforce the company’s dominance in the area.
Furthermore, this potential deal could surpass other major acquisitions in the U.S. oil industry, including Occidental Petroleum Corp.’s 2019 purchase of Anadarko Petroleum for $38 billion and Exxon’s 2009 acquisition of XTO Energy for $41 billion. The XTO Energy deal included around $10 billion in XTO debt, making the acquisition of Pioneer an even more substantial investment.
Looking back at Exxon’s previous acquisitions, the XTO Energy deal was a significant move for the company, as it gave the oil giant a foothold in the shale gas industry. However, the deal faced challenges due to the significant debt taken on by Exxon, and the company ultimately had to write down the value of its shale assets by over $2 billion in 2019.
With this potential acquisition of Pioneer, Exxon is once again looking to expand its presence in the shale industry, and it remains to be seen whether the company can successfully navigate the challenges that come with such a large investment.
