In a jointly issued statement, it has been revealed that Exxon is set to acquire Pioneer at a price of $253 per share. The deal will result in Pioneer shareholders receiving slightly over 2.32 shares of ExxonMobil for each Pioneer share at the transaction’s conclusion.

This acquisition by Exxon will encompass Pioneer’s extensive land holdings of over 850,000 net acres in the Permian Basin located in West Texas. This move is poised to substantially augment Exxon’s production capacity in a region that played a significant role in U.S. natural gas production in 2022, accounting for 18% of the total output, as per the Energy Information Administration.

Under the terms of the agreement, Pioneer stockholders will be given 2.3234 shares of Exxon for each Pioneer share they possess. This deal marks Exxon’s largest acquisition since its purchase of Mobil, and both companies anticipate its completion in the first half of 2024, as stated in their joint release.

Shares for Pioneer rose just over 1% to $240.50 in the first five minutes of trading on Wednesday morning while shares for Exxon fell about 0.4% to $110.45.

Market Impact of Exxon-Pioneer Acquisition

Exxon has projected that its production output in the Permian Basin will more than double to reach 1.3 million barrels of oil equivalent per day upon the successful completion of the deal.

Exxon Mobil, CEO Darren Woods, said the substantial long-term value creation resulting from the combined capabilities of both companies, surpassing what each could achieve independently. He further highlighted the integration of environmental best practices that will reduce the environmental footprint and accelerate Pioneer’s net-zero plan from 2050 to 2035.

Pioneer’s Chief Executive, Scott Sheffield, expressed the view that the company would be better positioned for sustained success due to its enhanced size and global scale, providing diversification across products and exposure throughout the entire energy value chain following the acquisition.

The announcement follows a report in The Wall Street Journal last week indicating the imminent closure of the deal. Since then, Pioneer’s shares have surged by more than 10%. However, their year-to-date increase stands at 3.9%, while the S&P 500 has outperformed with a 13% rise during the same period. Exxon shares have faced challenges in 2023, with only modest gains.

Summary

Exxon’s acquisition of Pioneer at $253 per share, exchanging shares at a ratio of 2.32, is a significant move to expand its presence in the Permian Basin. The deal enhances production capacity and environmental practices. Both companies anticipate a successful completion in 2024. Pioneer’s stock surged, while Exxon faced challenges amid a dynamic market landscape.

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