Exxon Mobil Corporation Chairman and CEO Darren Woods/AFP
Exxon Mobil Corporation’s Chairman and CEO Darren Woods unveiled a takeover of Pioneer Natural Resources for about $60 billion in the petroleum giant's biggest deal since the late 1990s merger between Exxon and Mobil. AFP

ExxonMobil sealed a megadeal to acquire Pioneer Natural Resources for about $60 billion, bolstering its holdings in the Permian Basin, a key US petroleum region, the companies announced Wednesday.

Under the all-stock transaction, ExxonMobil will buy Texas-based Pioneer for $59.5 billion based on ExxonMobil's closing price on October 5. The overall transaction, including debt, is valued at around $64.5 billion, the companies said.

ExxonMobil said the takeover, the company's biggest since the late 1990s acquisition of Mobil by Exxon, will enable greater economies of scale, permitting it to deploy drilling and operating technologies over a bigger region.

"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 ExxonMobil Chief Executive Darren Woods.

The "highly contiguous" drilling acreage of the two companies will allow "for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production," Woods said.

Production in the Permian Basin, located in western Texas and eastern New Mexico, accounts for a whopping 5.8 million barrels of oil per day, or about 45 percent of US output.

The region has a long and storied history, with the first wells dating to 1920. The basin soared during the energy boom of the 1970s before experiencing a steady decline in subsequent decades.

The US shale boom of the 2010s revived the area, with fracking and new drilling techniques that make development more affordable.

Both ExxonMobil and fellow US petroleum behemoth Chevron have invested heavily in the region in recent years.

With the Pioneer acreage, ExxonMobil will be able to drill some wells as long as four miles, boosting efficiency the oil giant said would enable it to produce the acquired acreage for less the $35 a barrel.

The takeover comes as oil currently trades at more than $85 a barrel, a relatively high historical benchmark.

ExxonMobil vowed that it would employ best practices on the environment, accelerating Pioneer's plan to reach "net zero" emissions by 15 years to 2035 and employing technology to limit methane emissions.

But as a longterm bet on oil and gas, the merger is unlikely to please climate activists.

ExxonMobil has long faced criticism that it intentionally fueled doubts about climate change science in order to protect its core business.

Under Woods, the company has established a low-carbon business, having acquired Denbury Inc., a specialist in enhanced oil recovery and carbon sequestration, for $4.9 billion earlier this year.

While ExxonMobil usually avoids big deals under a high price scenario, analysts noted that Pioneer's shares had retreated prior to speculation of the deal.

Another factor favoring a deal was the impending retirement of Pioneer CEO Scott Sheffield, who has planned to step down at the end of 2023.

Shares of Pioneer jumped 2.0 percent in pre-market trading, while ExxonMobil dropped 2.5 percent.

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