ExxonMobil has agreed to buy off Pioneer Natural Resources in an all-stock deal valued at $59.5 billion. This is the company's biggest acquisition ever since it bought Mobil in 1999.
The combination provides a big opportunity for mutual cooperation between the two firms, Exxon CEO Darren Woods said in a media briefing.
"We basically closed this deal fairly quickly," Woods added after approaching Pioneer CEO Scott Sheffield two weeks back. "It became very obvious very early on in those discussions that there's a big opportunity here."
At $253 per share, the deal gives Pioneer a value that is over 7 per cent more than its Tuesday closing value of $55.4 billion. It solidifies Exxon's position as the leading company in the American fracking sector, which is now based in West Texas and where Pioneer has more drilling opportunities than practically all of its competitors combined.
On Wednesday, shares of Pioneer increased by nearly 3 per cent in premarket trading. The price of Exxon declined by less than 1 per cent.
XTO Energy was purchased by Exxon in 2009 for about $36 billion. Exxon and Mobil's merger in the late 1990s was estimated to be worth about $80 billion.
Exxon's footprint in the Permian Basin, a sizable oilfield that spans the border between Texas and New Mexico, will be significantly increased as a result of the agreement with Pioneer Natural.
Through the deal, Pioneer’s land of more than 8,50,000 net acres in the Midland Basin will be clubbed with ExxonMobil’s 5,70,000 net acres of land in the Delaware and Midland Basin. These nearly contiguous fields will allow the company's combined costs to come down.