Oil and gas giant Exxon Mobil has acquired the major shale producer Pioneer Natural Resources in a merger valued at nearly $60 billion, the largest oil and gas deal in 20 years and one that will tie the company’s future to fossil fuels.
The deal, valued at $59.5 billion or $253 a share, is expected to come to a total enterprise value of $64.5 billion. The merger will secure Exxon’s status as the largest player in the fracking industry, covering more ground in West Texas, which is where Pioneer is stationed.
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The merger will have a combined Permian production volume of more than 1.3 million barrels of oil per day and is expected to increase to approximately 2 million barrels in 2027.
“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,” Exxon Mobil CEO Darren Woods said in a written statement. “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 acquisition is Exxon’s largest since its $75 billion merger with Mobil in 1998 and will be the biggest merger this year.
According to a statement released by Exxon Mobil, the company expects the merger will streamline the resources of the two companies, expecting a cost of supply of less than $35 per barrel from Pioneer’s assets. The deal will also allow horizontal drilling up to 4 miles, resulting in fewer wells and a smaller surface footprint.
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Exxon Mobil also said that it still plans to achieve net-zero Scope 1 and Scope 2 gas emissions — that is, the emissions generated from its own operations and energy use, but not those involved in the use of the oil and gas produced — from its Permian operations by 2030 and stated that it intends to leverage its plan to reduce emissions in the Permian Basin to accelerate Pioneer’s net-zero emissions plan by 15 years, to 2035.
The two companies said that the transaction will close in the first half of 2024.
