A "Seismic Deal": Exxon Planning Acquisition Of Shale Giant Pioneer

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by Tyler Durden
Friday, Apr 07, 2023 - 08:20 PM

In a deal that would be transformational for the US energy sector, and spark another shale revolution, the WSJ reports that US supermajor, the largest US energy E&P and formerly the world's largest company by market cap, Exxon - the company that according to the Big Guy made more money than God in 2021, has held preliminary talks with shale giant Pioneer Natural Resources about a possible acquisition of the U.S. fracking giant, as the oil major hunts for a blockbuster deal in the shale patch.

Citing "people familiar" the WSJ notes that while discussions between the two companies about a potential deal have been informal, and there is no formal process between Exxon and Pioneer yet, now that Exxon is flush with cash thanks to record profits in 2022 it has been exploring options that could reshape a swath of the U.S. oil and gas industry while pushing Exxon deeper into West Texas shale.

WSJ sources said that any deal, if it happens, likely wouldn’t come together until later this year or next year - which makes sense since Biden's DOJ would do everything in its power to prevent such a combination, and just like bitcoin bulls, energy shareholders are also eagerly awaiting the collapse of the authoritarian, senile occupier of the White House who picks corporate winners and losers at the behest of his handlers - and talks may not morph into formal negotiations at all or Exxon may pursue another company.

Still, with Exxon on the hunt for what the WSJ described as a "seismic deal" to put its windfall profits to use, it sees Dallas area-based Pioneer as a top target.

Should Exxon, whose stock price is near all time highs and sports a market cap just shy of half a trillion dollars, acquire Pioneer whose market cap is around $49 billion, it would be Exxon’s largest since its mega-merger with Mobil in 1999. It would give Exxon a dominant position in the oil-rich Permian Basin of West Texas and New Mexico, a region Exxon has said is integral to its growth plans.

Pioneer’s size would likely put an acquisition of the company ahead of the U.S. oil industry’s most recent blockbuster, Occidental Petroleum Corp.’s 2019 purchase of Anadarko Petroleum Corp. for about $38 billion, and top Exxon’s 2010 acquisition of XTO Energy Inc. for more than $30 billion. That said, nothing is guaranteed in the energy sector which together with crypto, has emerged as the most hated industry of the so-called Democrats. In 2020, when the price of oil collapsed, and when many were doubting that Exxon would avoid bankruptcy, it subsequently emerged (again via the WSJ) that Exxon was considering a merger with Chevron, the energy sector's 2nd largest company.  Back then, talks between Exxon and Chevron were preliminary and yielded no result. Whether or not there is a favorable outcome for Exxon this time will depend on who the next president is.