Under the terms of the agreement, Vanguard shareholders will receive 2.3234 shares of Exxon Mobil for each Pioneer share they own. The boards of directors of both companies have unanimously approved the transaction, subject to regulatory review and Pioneer shareholder approval, and the transaction is expected to close in the first half of 2024, the statement said.
The deal would be Exxon's largest since it paid $73.7 billion for Mobil in 1999 and the most valuable since the start of the year.
By comparison, only Microsoft's announced acquisition of Activision Blizzard ($68.7 billion), India's HDFC Bank's acquisition of Housing Development Finance Corporation ($64 billion) and Broadcom's acquisition of VMware ($61 billion) surpassed that amount last year.
The deal will combine Pioneer's more than 850,000 acres in the Permian with ExxonMobil's 570,000 acres, and the new entity is expected to have approximately 16 billion barrels of oil equivalent in the region, the press release said.
Source: ExxonMobil Press Release
Upon completion of the transaction, ExxonMobil's Permian Basin production will more than double from 2023 production to 1.3 million barrels of oil equivalent per day, making it the largest oil producer in the region, and is expected to increase to about 2 million barrels per day by 2027.
Darren Woods, Exxon's chief executive, wrote, "The combined capabilities of our two companies will provide far more long-term value creation than any single company."
According to people familiar with the matter for media reasons, the acquisition of Pioneer Natural Resources could allow ExxonMobil to lock in low-cost oil production for the next decade. According to the data, Vanguard Natural Resources' average cost of shale oil and gas extraction is about $10.50 per barrel.
Analysts at Citi said that the idea of integrating shale oil in the Permian Basin is logical, and economies of scale will bring huge benefits, "This special combination will create one of the largest players in the Permian Basin, while the trading premium is not large, and we expect to generate positive investment returns."
Woodlan added that the merger also brings together the environmental experience of both companies and plans to advance Pioneer's net zero time point from 2050 to 2035.
