ExxonMobil (XOM) Signs Deal to Acquire Shale Driller Pioneer
Exxon Mobil Corporation XOM entered an agreement to acquire Pioneer Natural Resources PXD in an all-stock transaction worth $59.5 billion.
The acquisition will position ExxonMobil as the leading producer in the largest U.S. oilfield, ensuring a decade of cost-effective production. The deal is expected to close in early 2024.
The acquisition will likely be XOM’s largest merger after the one with Mobil Corporation in 1999. The move aligns with other oil companies refocusing their strategies toward fossil fuel production and scaling down their commitments to transition into cleaner energy sources.
The agreement would bring together two major landholders in the Permian Basin of Texas and New Mexico, solidifying ExxonMobil’s position as the dominant producer in the oil field by a significant margin.
The merger combines Pioneer’s extensive 850,000 net acres in the Midland Basin with ExxonMobil's 570,000 net acres in the Delaware and Midland Basins. Together, the companies will have an estimated 16 billion barrels of oil equivalent (boe) resources in the Permian Basin.
Once the deal closes, ExxonMobil’s Permian production volumes are set to increase to more than 1.3 million barrels of oil equivalent per day (boe/d) based on 2023 figures. This production volume is anticipated to rise to 2 million boe/d by 2027.
ExxonMobil views the transaction as a chance to enhance U.S. energy security by bringing top-notch technologies, operational expertise and strong financial resources to a crucial domestic energy source. This move is expected to benefit the American economy and its consumers.
The strategic alignment of Pioneer’s contiguous acreage will enable ExxonMobil to undertake horizontal drilling of up to four miles, reducing the number of wells required and minimizing the surface area needed. Additionally, the company plans to improve field digitalization and automation, which will optimize production efficiency and reduce costs.
Zacks Rank & Other Key Picks
ExxonMobil currently carries a Zack Rank #2 (Buy).
Investors interested in the energy sector may look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
USA Compression Partners USAC is a leading energy infrastructure provider, which specializes in large-horsepower applications. The stability in cash flow for USA Compression Partners has enabled it to maintain a steady quarterly distribution of 52.50 cents since the second quarter of 2015.
USA Compression Partners has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for USAC’s 2023 and 2024 earnings per share is pegged at 30 cents and 58 cents, respectively.
Cactus Inc. WHD generates significant cash flows from selling and renting the wellhead and pressure control equipment. The company is strongly focused on returning capital to shareholders, as reflected in its recent announcement of a share repurchase program of up to $150 million.
Cactus has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 60 days. The consensus estimate for WHD’s 2023 and 2024 earnings per share is pegged at $2.79 and $3.38, respectively.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
USA Compression Partners, LP (USAC) : Free Stock Analysis Report
Cactus, Inc. (WHD) : Free Stock Analysis Report
