ExxonMobil agrees to buy shale group Pioneer in $59.5bn deal

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ExxonMobil has agreed to buy Pioneer Natural Resources in a $59.5bn deal that is set to unleash a wave of consolidation in the US shale oil industry.

The biggest western oil supermajor said on Wednesday it had sealed an all-stock deal that values Pioneer at $253-a-share. The combination hands Exxon a dominant position in the Permian Basin, the vast field in western Texas and New Mexico that has helped turn the US into the world’s largest oil and gas producer.

The purchase of Pioneer, which was founded by chief executive Scott Sheffield in 1997, is the group’s biggest acquisition since it was formed through the merger of Exxon and Mobil in 1999. It is also the first of any size under Darren Woods, who has led Exxon since 2017.

“The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” said Woods.

Houston-based Exxon has been on the hunt for acquisitions after amassing a substantial cash pile over the past year. Russia’s invasion of Ukraine sent oil prices soaring, driving Exxon’s profits to a record.

Analysts expect the deal will herald consolidation across the still fragmented US shale industry, which has been subject to cycles of boom and bust over the past decade.

After years of reckless spending, Wall Street has forced shale operators to stop pursuing costly drilling ventures from scratch, leaving acquisitions as the best means to secure a shrinking number of prime drilling sites.

Speaking before the deal was announced, Andrew Dittmar, analyst at consultancy Enverus, said the transaction represented a “significant win” for Exxon and a “reasonable conclusion” for Pioneer.

Pioneer is the pre-eminent operator in the Permian field and the deal brings 15 per cent of the basin’s output under Exxon’s control, according to RBC Capital Markets.

The sale of Pioneer comes after Sheffield in April announced plans to retire for a second time at the end of this year. He had stepped down in 2016 before returning to the helm three years later.