The news emerged first on Monday and it sent the XOM stock up nearly 6% on that day. The stock then slightly dropped before surging to a higher price although it is still trading lower than where it was last week on Wednesday.
Exxon in talks with Pioneer Natural Resources
Though the talks between the two oil companies are reportedly still informal, it is a pointer that Exxon Mobil is in pursuit of a blockbuster deal after a profitable 2022. Exxon reported record profits last year.
Exxon is reportedly considering all options that could significantly reshape the oil and gas industry in the US and also help it increase its foothold in the West Texas Shale. According to WSJ, although no formal communication about the talks has been made, Exxon views Pioneer as a top target for its expansion.
If successful, the Pioneer buyout would mark Exxon’s biggest acquisition since its colossal merger deal with Mobil Corporation in 1999. The acquisition would strengthen Exxon’s position in the Permian Basin of West Texas and New Mexico region, which are central to the company’s growth strategy.
Going by Pioneer’s market cap of over $51 billion, its acquisition would be bigger than the Occidental Petroleum (NYSE: OXY) acquisition of Anadarko Petroleum (NYSE: APC) for $38 billion in 2019. Pioneer is the biggest oil producer in Permian Basin while Exxon is the sixth-largest.
In 2022, Pioneer reports a profit of $8.4 billion, of which $8 billion was distributed to its shareholders through share buybacks and dividends.
Exxon has said that it plans on spending a bigger share of its $25 billion annual capital in the Americas in 2023 and the Pioneer deal could be a game changer.