AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

NEW YORK/HOUSTON: Exxon Mobil agreed to buy U.S. rival Pioneer Natural Resources in an all-stock deal valued at $59.5 billion that would make it the biggest producer in the largest U.S. oilfield and secure a decade of low-cost production.

The deal, valued at $253 a share, combines the largest U.S. oil company with one of the most successful names to emerge from the shale revolution that turned the country into the world’s largest oil producer in little more than a decade.

The offer represents a 9% premium to Pioneer’s average price for the 30 days prior to Oct. 5, when reports of deal talks surfaced. Pioneer shares were up 2% at $241.79 in premarket trading. Exxon shares fell 2.5%.

The deal, which is expected to close in early 2024, will leave four of the largest U.S. oil companies in control of much of the Permian Basin shale field and its extensive infrastructure.

Still, antitrust experts told Reuters last week that Exxon and Pioneer stood a good chance of completing their deal, even though they would face heavy scrutiny. This is because they could argue that even as the largest Permian producer, together they will account for a small fraction of a vast global market for oil and gas.

“An FTC review is quite possible but the market share of this combination appears to be under thresholds typically warranting action,” RBC Capital Markets analyst Scott Hanold said in a note.

Pioneer is Permian’s largest operator accounting for 9% of gross production, while Exxon occupies the No. 5 spot with 6%, according to RBC Capital Markets analysts.

“The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” said Pioneer CEO Scott Sheffield.

Pioneer had bulked up through multibillion-dollar deals such as those of shale rivals DoublePoint Energy for $6.4 billion in 2021 and Parsley Energy for $7.6 billion in 2020 under founder-CEO Sheffield.

For Sheffield, an industry veteran who has said he would retire at the end of the year, the sale could be his swan song.

The Permian is highly valued by the U.S. energy industry because of its relatively low cost to extract oil and gas, with rock-bottom production costs averaging about $10.50 per barrel.

It is Exxon’s biggest since its $81 billion purchase of Mobil Oil in 1998, years before the shale boom began.

It would also outrank oil major Shell’s $53 billion acquisition of BG Group in 2016, which put it atop the global liquefied natural gas market.

Woods in driver’s seat

Exxon has pulled itself out of a period marked by deep losses and huge debts in the last two years by slashing costs, selling dozens of assets and benefiting from high energy prices spurred by Russia’s invasion of Ukraine.

Chief Executive Darren Woods has rebuffed investor and political pressure to shift strategies and embrace renewable energy as European oil majors have done. He faced heavy criticism for sticking to a heavy oil-dependent strategy as climate concerns became more pressing.

Exxon’s decision paid off when the company last year earned a record $56 billion profit, two years after losses ballooned to $22 billion during the COVID-19 pandemic.

The company socked away some of the huge profits from the oil-price run up, putting aside some $30 billion in cash in anticipation of deals, according to analysts.

In July, Exxon agreed to a $4.9 billion all-stock deal for Denbury, a small U.S. oil firm with a network of carbon dioxide pipelines and underground storage. That acquisition was intended to bolster Exxon’s nascent low-carbon business.

Exxon originally made an all-cash bid for Denbury, and at the last minute switched to all stock, reflecting both the target’s rise in market value during the talks and investors wanting to take part in any upside in Exxon’s stock.

The oil giant’s share price has recovered strongly since its early 2020 tumble to about $30 as oil and gas prices collapsed. Exxon shares recently hit an all-time high of $120 per share.

Comments

Comments are closed.