NEW YORK/HOUSTON, Oct 10 (Reuters) – Exxon Mobil (XOM.N) is expected to say on Wednesday it will buy U.S. rival Pioneer Natural Resources (PXD.N) for about $60 billion, a deal that would make it the largest Puts you on top of the deal. The US oil sector ensures production at low costs for a decade, according to people familiar with the matter.
Exxon, valued at $442 billion on Tuesday, is expected to offer pure stock worth more than $250 a share for Pioneer, the people said on condition of anonymity because the details were not public.
Pioneer shares closed at $237.41 on Tuesday, up 11% since the deal was first reported last Thursday.
It would be the largest acquisition by any company this year and Exxon’s largest since its $81 billion purchase of Mobil Oil in 1998.
Exxon declined to comment on “market speculation,” while Pioneer did not immediately respond to a request for comment.
The deal would give the four largest US oil companies control over the Permian Basin shale region and its extensive oilfield infrastructure.
Antitrust experts told Reuters last week that Exxon and Pioneer have a good chance of completing their deal, even though they would face heavy scrutiny. This is because they can argue that together they will account for a small portion of the huge global market for oil and gas.
The proposed deal comes as Exxon has pulled itself out of deep losses and heavy debt over the past two years by cutting costs, selling dozens of assets and taking advantage of higher energy prices boosted by Russia’s invasion of Ukraine.
Chief Executive Darren Woods has rejected investor and political pressure to change strategies and embrace renewable energy like European oil majors. He faced heavy criticism for sticking to a strategy heavily dependent on oil as climate concerns became more serious.
The decision paid off as the company made a record $56 billion profit last year, even as losses swelled to $22 billion two years later during the COVID-19 pandemic.
Exxon pocketed some of the huge profits it made from rising oil prices and set aside about $30 billion of cash in anticipation of the deals, according to analysts.
Pioneer has been one of the most successful oil companies to emerge from the shale revolution, transforming the US from a major oil importer to the world’s largest producer in less than a decade.
It is the third-largest oil producer in the Permian Basin, behind Chevron Corp (CVX.N) and ConocoPhillips (COP.N), whose oil and gas production costs average about $10.50 a barrel.
Under CEO Scott Sheffield, the oil producer grew rapidly through buyouts, including multibillion-dollar deals for DoublePoint Energy and Parsley Energy in 2021.
Exxon’s planned purchase would follow on from BG Group’s $53 billion acquisition of oil major Shell (SHEL.L) in 2016, which put it on top of the global liquefied natural gas market.
Bloomberg News reported the deal price on Tuesday.
In July, Exxon agreed to a $4.9 billion all-stock deal for Danbury Inc., a small U.S. oil company with a network of carbon dioxide pipelines and underground storage. That acquisition was intended to boost Exxon’s nascent low-carbon business.
The largest U.S. oil producer originally made an all-cash bid for Denbury, and switched to all stock at the last minute, boosting the target’s market value during negotiations and taking part in any upside in Exxon’s stock. Interested investors represent both.
The oil giant’s share price fell by nearly $30 in early 2020 due to falling oil and gas prices. Exxon shares recently reached an all-time high of $120 per share.
By Shubhendu Deshmukh in Bengaluru, Anirban Sen in New York and Sabrina Vale in Houston; Written by Gary McWilliams; Editing by Rashmi Aich and Jamie Freed
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