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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
ExxonMobil plans largest takeover in more than two decades, reinforcing its commitment to fossil fuels
18/10/2023
ExxonMobil has unveiled plans to buy Pioneer Natural Resources in an all-stock transaction valued at some $60bn that would more than double ExxonMobil’s Permian Basin footprint and see the company dominating the US shale oil market. However, the deal is expected to face tough antitrust investigation by the Federal Trade Commission.
The merger, ExxonMobil’s largest takeover in over two decades, combines Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins. Together, the companies will have an estimated 16bn boe resource in the Permian, spanning parts of Texas and New Mexico. At close, ExxonMobil’s Permian production volume would more than double to 1.3mn boe/d, forecast to rise to some 2mn boe/d in 2027.
The deal suggests that ExxonMobil is confident that US energy policy will not move any time soon against fossil fuels, despite the Biden Administration’s drive to transition to cleaner energy and reach net zero by 2050. The company says it believes the transaction represents ‘an opportunity for even greater US energy security by bringing the best technologies, operational excellence and financial capability to an important source of domestic supply, benefitting the American economy and its consumers’.
Furthermore, ExxonMobil reports that the complementary fit of Pioneer’s contiguous acreage will allow it to ‘drill long, best-in-class laterals, up to four miles, which will result in fewer wells and a smaller surface footprint’. The company also expects to ‘enhance field digitalisation and automation that will optimise production throughput and cost’.
As part of the transaction, ExxonMobil intends to leverage its Permian Scope 1 and Scope 2 greenhouse gas (GHG) reduction plans to accelerate Pioneer’s net zero emissions target by 15 years, to 2035. In addition, using combined operating capabilities and infrastructure, it expects to increase the amount of recycled water used in Permian fracturing operations to more than 90% by 2030.
The takeover capitalises on the surge in oil and gas prices following Russia’s invasion of Ukraine and a nearly doubling in value of ExxonMobil’s shares over the past couple of years. However, the deal, which would see the merged operation dominating the US unconventional sector, is expected to face tough antitrust investigation by the Federal Trade Commission.
