Exxon Buys Pioneer in $60 Billion Deal to Create Shale Giant
Deal is Exxon’s largest since its merger with Mobil in the late 1990s
Exxon XOM -0.42%decrease; red down pointing triangle Mobil struck a nearly $60 billion agreement Wednesday to buy Pioneer Natural Resources PXD 0.76%increase; green up pointing triangle in the largest oil-and-gas deal in two decades, tying the energy giant’s future to fossil fuels.
The deal, at $253 a share, values Pioneer at an almost 7% premium to its closing value of about $55.4 billion Tuesday. It cements Exxon’s status as the dominant player in the American fracking industry, now centered in West Texas, where Pioneer has more places to drill than almost all of its rivals.
Shares in Pioneer rose about 3% in premarket trading on Wednesday. Exxon’s stock dropped less than 1%.
The deal is Exxon’s largest since its $75 billion merger with Mobil in the late 1990s and is the biggest corporate transaction so far this year. The Wall Street Journal reported last week that Exxon and Pioneer were closing in on the tie-up.
Exxon’s all-stock transaction leans heavily on its higher share price relative to its peers over the past year. Several institutional investment firms have snapped up more of Exxon’s shares following a surge in oil and gas prices, keeping its stock performing more strongly than that of most other oil companies.
The megadeal immediately reshapes the legacy of Exxon Chief Executive Darren Woods. Under his watch, Exxon sputtered in 2020 to its first annual loss in decades as the pandemic ravaged the oil industry, and then it lost a historic proxy battle with an activist investor the following year.
In 2022, as oil and gas prices surged following Russia’s invasion of Ukraine, Exxon rocketed to a record annual profit of $55.7 billion, becoming the fourth-most prosperous American publicly traded company after Apple, Microsoft and Google parent Alphabet, according to FactSet.
Woods has credited his company’s countercyclical and sometimes unpopular investments in fossil-fuel projects, while others have pointed to higher oil prices and other factors outside the company’s control.
Its cash windfall and the industry’s recovery from the lows of the pandemic spurred Exxon executives to begin looking for transformative deals, particularly in the Permian Basin of West Texas and New Mexico, where Pioneer drills.