Exxon, the American oil giant, has made a strategic shift to strengthen its presence in the shale oil and gas sector by announcing the purchase of its compatriot Pioneer Natural Resources, a prominent company in the field, for approximately $60 billion. . This acquisition represents the largest operation carried out by the company since its merger with Mobil in 1999.
The transaction is expected to be completed during the first half of 2024 and will further consolidate Exxon’s position, already one of the world’s leading oil conglomerates, in the Permian Basin. This vast oil region, which spans west Texas and southeastern New Mexico, contributes about 5.8 million barrels of oil daily, representing approximately 45% of U.S. oil production.
The oil giant plans to fully fund the acquisition of Pioneer Natural Resources with stock, worth $59.5 billion, based on the company’s closing stock price on October 5. The total transaction, including debt, is estimated at around $64.5 billion, according to joint statements from both companies.
With this operation, Exxon Mobil aims to more than double its daily production of barrels of oil equivalent in the Permian Basin, reaching 1.3 million barrels per day after the acquisition and projecting approximately 2 million by 2027. In 2022, the group reported a total production of 3.7 million barrels of oil equivalent per day.
The geographic proximity of both companies’ drilling areas in the Permian Basin will open “greater opportunities to deploy our technologies, ensuring operational and financial efficiency, and a substantial increase in production,” said Exxon Mobil CEO Darren Woods. as cited in the press release.
The deal has been deemed “strategically logical” by JPMorgan analysts as it expands Exxon Mobil’s presence in the Permian region, narrowing the gap with competitors Chevron and ConocoPhillips. In addition, it allows advanced production techniques to be applied on Pioneer lands, thus improving the quality of operations, as mentioned in an attached note.
Regarding the environmental issue, both companies have highlighted their goal of achieving carbon-neutral production in the Permian Basin as early as 2035, instead of 2050. However, this could generate criticism from environmental defenders, against a backdrop of growing global calls to reduce dependence on fossil fuels and address climate change.
It is relevant to note that large private oil companies worldwide, including Shell, ExxonMobil and BP, have faced criticism and even lawsuits for their continued investments in hydrocarbons. A study published in January in the journal Science highlighted that ExxonMobil had highly accurate forecasts of climate change as early as the 1980s, developed by its own scientists. However, the company has publicly questioned the state of scientific knowledge on this topic for years.