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ExxonMobil is buying Pioneer Natural Resources, resulting in a $59.5 billion all-stock transaction and boosting its fracking capabilities.
It will be the largest acquisition for the fossil fuel colossus after Exxon bought Mobil two decades ago, according to The Associated Press. Pioneer Natural’s buyout allows for Exxon’s growth in the Permian Basin, a large oilfield in the Southwestern U.S.
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“Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian,” a press release from Exxon said. The larger company would be able to double the Permian production volume to the equivalent of 1.3 million barrels a day, based on this year's estimates. By 2027, that could reach about 2 million barrels a day, the release said.
“ExxonMobil believes the transaction represents an opportunity for even greater U.S. energy security by bringing the best technologies, operational excellence and financial capability to an important source of domestic supply, benefitting the American economy and its consumers,” the release continued.
As the buyout occurs, Exxon is in decent financial standing, with profits of $55.7 billion last year. Those profits topped a previous record of $44.22 billion from 2008. Exxon Mobil Corp. has been using its cash for acquisitions. It bought pipeline operator Denbury in a $4.9 billion deal in July.
Pioneer has also been making recent acquisitions. The company said it was buying Parsley Energy in a $4.5 billion deal in 2020. It also bought DoublePoint Energy in a $6.4 billion deal in 2021.
ExxonMobil Chairman and CEO Darren Woods said in the release the "combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.”
“I think fossil fuels, as the world looks to transition and find lower sources of affordable energy with lower emissions, fossil fuels oil and gas are going to continue to play a role over time,” Woods told CNBC. “That may diminish with time. The rate of that is, I think, not very clear at this stage. But it will be around for a long time.”
Woods explained that Exxon and Pioneer will be able to use their combined capabilities to drive down emissions and produce lower carbon intensity oil and gas.
The Associated Press contributed.