Exxon Mobil is closing in on a blockbuster takeover of Pioneer Natural Resources, with the $60 billion acquisition potentially reshaping the U.S. oil industry. 🛢️
After posting a record profit in 2022, the oil giant has been looking for ways to put that cash to work. It’s also been eyeing the oil-rich Permian Basin of West Texas and New Mexico, a region it says is critical to its growth plans.
Buying Pioneer would be Exxon’s largest deal since merging with Mobil in 1999, but it would quickly give it a dominant position in the Permian Basin of West Texas and New Mexico. Pioneer’s presence in the Midland Basin is seen as one of the largest collections of fertile oil land in the U.S., and it also holds one of the largest numbers of untapped drilling locations. 🤩
The move would top other major deals, including the 2019 acquisition of Anadarko Petroleum by Occidental Petroleum for $38 billion and Exxon’s 2010 purchase of XTO Energy for $30 billion. 💰
Drilling for new oil discoveries has been difficult as investors push back on the expensive endeavor. Not to mention the government’s push towards greener energy, making it more challenging to receive approvals for new fossil fuel exploration and production. As a result, Exxon and other major players have no choice but to acquire rivals if they want to expand their capacity and production runway. 📊
The deal looks close, but not certain, so all eyes will be on these stocks in the coming days and weeks as final details are nailed down. Given Exxon’s massive size, investors will also have to see if the government steps in with any anti-trust concerns. Thought analysts say that’s unlikely, given the wide breadth of the industry.
And lastly, we wanted to point out something funny. The two companies’ total returns have been neck and neck for the last five years. However, with today’s pop and drop, they’ve converged to roughly the same 63% level. Maybe they were destined to be together? 🤷
