12 October 2023

Exxon Mobil to acquire Pioneer Natural Resources for $59.5 billion

This transaction represents Exxon's most significant acquisition since its merger with Mobil in 1999 and is currently the largest corporate acquisition in the world this year. The combination will give Exxon a dominant position in the Permian Basin, a vast oil field in West Texas and New Mexico that has helped the US become the world's largest oil and gas producer.

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Houston-based Exxon has been actively pursuing acquisitions since last year after managing to build up significant cash reserves. The sharp rise in oil prices in the wake of Russia's invasion of Ukraine brought Exxon record net income of $55.7 billion, ranking it fourth among publicly traded U.S. companies, behind only Apple, Microsoft and Alphabet.

Pioneer Natural Resources has expanded through significant multi-billion dollar acquisitions in the past, including DoublePoint Energy for $6.4 billion in 2021 and Parsley Energy for $4.5 billion in 2020, all under the leadership of its founder and CEO Sheffield. The combined entity is estimated to have 16 billion barrels of oil reserves in the Permian Basin, effectively doubling Exxon's production in the Permian Basin to more than 1.3 million barrels of oil per day.

It should be noted that the transaction is expected to be subject to strict antitrust scrutiny by the Federal Trade Commission. There are also certain risks associated with the transaction, including the possibility of a more rapid decline in oil demand than Exxon anticipates. The International Energy Agency recently predicted that demand for fossil fuels may peak this decade, while Exxon remains confident of sustained oil consumption due to growing demand from the commercial transportation and chemical industries.