Home Stock Market Exxon expands presence in major US oilfield by acquiring Pioneer in a $60 billion deal.

Exxon expands presence in major US oilfield by acquiring Pioneer in a $60 billion deal.

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Exxon expands presence in major US oilfield by acquiring Pioneer in a $60 billion deal.

Exxon Mobil to Acquire Pioneer Natural Resources in $59.5 Billion Deal

Exxon Mobil’s Bold Move in the Permian Basin

Exxon Mobil has announced its plans to acquire Pioneer Natural Resources in a deal worth $59.5 billion. The acquisition will establish Exxon Mobil as the largest producer in the Permian Basin, one of the top oilfields in the United States.

Analysts Weigh In on the Deal

Wall Street analysts have shared their reactions to the deal. Tom Ellacott, Senior Vice President of Corporate Research at Wood Mackenzie, describes it as a massive oil deal that demonstrates Exxon Mobil’s bullishness on long-term oil demand and prices. He also notes that the acquisition will increase Exxon Mobil’s already oil-weighted portfolio, presenting challenges in the transition to low-carbon energy.

RBC Capital Markets analysts believe that there will be no competing bids for the deal, as the transaction’s size would discourage other buyers. They also highlight that Chevron, Exxon Mobil’s main competition, may now feel compelled to make a significant acquisition.

Gabriele Sorbara, Managing Director of Equity Research at Siebert Williams Shank & Co, anticipates that the deal will ultimately close despite potential scrutiny from the FTC. He emphasizes that the combination of Exxon Mobil and Pioneer Natural Resources fits perfectly for Exxon Mobil and further drives up Pioneer’s share price.

Jeff LeBlanc, Equity Analyst at Tudor, Pickering, Holt & Co, believes that this deal solidifies Exxon Mobil’s position as having the most attractive global upstream portfolio. The assets acquired through this deal will provide Exxon Mobil with the best-in-class short-cycle investment flexibility.

Ryan Todd, Analyst at Piper Sandler & Co, expects the deal to increase Exxon Mobil’s advantage and put pressure on its peers, particularly Chevron, which has struggled with investor concerns regarding portfolio depth. He also suggests that there may be future consolidation activity in the industry.

David Deckelbaum, Analyst at TD Cowen, highlights that the deal is mostly upstream and predicts that it will receive FTC approval. He also mentions that the combined entity represents about 10% of total Permian oil production.

Conclusion

The acquisition of Pioneer Natural Resources by Exxon Mobil is a significant move that solidifies Exxon Mobil’s position as a major player in the Permian Basin. While the deal presents challenges in the transition to low-carbon energy, analysts believe it will ultimately benefit Exxon Mobil and increase its advantage in the industry.