In a historic move, Exxon Mobil (XOM:US), one of the largest energy companies in the world, is set to acquire its U.S. rival, Pioneer Natural Resources (PXD:US), for an estimated $60 billion, reported by Reuters. This groundbreaking acquisition is set to be the most significant of the year, surpassing even Exxon's monumental $81 billion purchase of Mobil Oil in 1998.
Experts believe this move will position Exxon Mobil atop the U.S. oilfield, promising a decade of low-cost production. Interestingly, the proposed acquisition has caused Pioneer's stock to surge, closing at $237.41 on October 10, marking an 11% increase since the initial report of this acquisition emerged the previous Thursday.
In the wake of significant losses and debt, Exxon has made a remarkable rebound over the past two years, by cost-cutting, asset sales, and high energy prices due to Russia's actions in Ukraine. This led to a record $56 billion profit last year, a leap from a $22 billion loss during the pandemic's peak.
The proposed deal between Exxon and Pioneer would result in four major U.S. oil companies taking control of a significant portion of the Permian Basin shale field including its extensive oilfield infrastructure. Despite anticipated close scrutiny, antitrust experts suggested a favorable outcome for the deal, as the companies could argue that their combined presence represents only a small fraction of the vast global oil and gas market.
Pioneer, ranking third in oil production in the Permian basin after Chevron Corp (CVX:US) and ConocoPhillips (COP:US) and boasting low production costs of about $10.50 per barrel, saw its share price rise by 0.8% to $237.41 on Tuesday, pushing its market value to around $55 billion. The stock further surged by 3% post-trading. In contrast, Exxon's shares dipped slightly by 0.4% to $110.45, reflecting a market valuation of approximately $442 billion.
For those closely tracking the developments in this potential acquisition, you might recall our report earlier this year, in April, discussing Exxon's consideration to buy Pioneer Natural Resources.