(Bloomberg) – Exxon Mobil Corp. is in talks to buy Pioneer Natural Resources Co. in a deal that would be the biggest in more than two decades as the energy giant seeks to become the dominant U.S. producer of shale oil, according to a person familiar with the matter.
An agreement could be worth as much as $60 billion and could be finalized in the coming days, barring any complications, according to the Wall Street Journal, which first reported the talks on Thursday.
At that size, the deal would potentially be the world’s biggest this year, surpassing the $43 billion acquisition of cancer drug maker Seagen Inc. by pharmaceutical giant Pfizer Inc. that was announced in March. It would also be Exxon’s biggest acquisition since its 1999 merger with Mobil Corp. and would make the energy giant the top producer in the most prolific U.S. oil basin.
Pioneer shares closed Thursday at $214.96 each, valuing the company at $50.1 billion.
Though the deal has advanced, it could still fall apart, the person said. In response to requests for comment from Bloomberg, both Exxon and Pioneer said they don’t comment on “market rumors.
A deal with Pioneer would combine two of the largest acreage holders in the Permian Basin of Texas and New Mexico, making Exxon by far the largest producer in the oilfield with about 1.2 MMbpd of output – more than many OPEC nations. It would also add decades to Exxon’s inventory of prime drilling locations in the basin, providing low-cost, low-risk crude well beyond 2050 to feed its vast network of Gulf Coast refineries.
Sheffield’s more than 20 years at the helm of Pioneer is one of the longest public CEO tenures in the U.S. oil industry. He cut his teeth in the Permian Basin more than 40 years ago and continued to work there through the dark decades when supermajors like Exxon abandoned the basin to look for oil overseas. By 2010, when drilling and fracking innovations developed for natural gas fields were being adapted for oil, Pioneer was well-positioned to become one of the fastest-growing producers.
Exxon had been looking to make acquisitions in the Permian for years, but it struggled with timing. The company’s finances took a hit during the pandemic as oil prices plummeted and it ramped up capital spending on large global projects, forcing Exxon to borrow billions of dollars to pay shareholder dividends.
After pulling back on spending, cutting costs, and reaping the benefits of pandemic-era investments, Exxon’s profits soared to a record $59 billion in 2022. The stock, meanwhile, has gained more than 80% in the past year, providing the financial firepower for a potentially era-defining deal with Pioneer.