Market Commentary

Exxon's Game-Changing Acquisition of Pioneer Natural Resources

Namra Pervaiz
6 Feb 2024 · 2 minutes read

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.

Back in August, Congressman Michael Guest bought XOM shares valued between $1,000 to $15,000. In the same month, Congressman Dan Sullivan offloaded PXD shares worth between $1,000 to $15,000.