Exxon Mobil is currently in advanced discussions to acquire Pioneer Natural Resources Co. in a deal that could be worth as much as $60 billion. A deal could be completed within days and would likely be the year's largest transaction.
The Wall Street Journal first reported in April that the two companies were holding preliminary talks, and this week cited a source close to the deal that said an announcement was imminent. A potential Pioneer acquisition, currently trading at a $50 billion market value, would mark Exxon's largest deal since its merger with Mobil in 1999.
The ongoing Exxon-Pioneer talks highlight the growing trend of consolidation within the oil and gas industry, particularly in the Permian Basin. A successful deal would combine two of the region's largest acreage holders and push Exxon's Permian output to around 1.2 million barrels a day. It's strategically significant for the producer, securing a low-cost source of crude that can leverage its extensive Gulf Coast refinery network through 2050.
In 2021, Pioneer took advantage of pandemic-related market disruption and acquired two large Permian Basin competitors, Parsley Energy and DoublePoint Energy, for a combined $11 billion. The move consolidated what analysts now view as one of the most attractive collections of oil acreage in the U.S., with a number of drilling sites that remain untapped.
In addition to deepening its presence in the Permian Basin, a potential Exxon acquisition would surpass Occidental Petroleum’s 2019 purchase of Anadarko Petroleum for about $38 billion and top its 2010 acquisition of XTO Energy for more than $30 billion. It's also a move that could relieve some of the pressure felt in recent years, including a 2020 activist attack by investor Engine No. 1.
Exxon is flush with cash thanks to strengthened energy markets, booking a record $56 billion profit last year, and is now looking to reinvest. Its current interest in Pioneer comes only a few months after it purchased CO2 pipeline operator Denbury for $4.9 billion.