ExxonMobil has signed an all-stock deal worth $59.5bn to acquire Pioneer Natural Resources, an American publicly listed company focused on upstream operations in the Permian shale basin.

Based on ExxonMobil’s closing price on 5 October 2023, the merger is valued at $253 per share.

After including debt, the implied total enterprise value of the deal is around $64.5bn.

As per the terms of the deal, shareholders of Pioneer Natural Resources will exchange each of their shares in the company for 2.3234 shares of ExxonMobil at closing.

Pioneer Natural Resources CEO Scott Sheffield said: “As part of a global enterprise, Pioneer, our shareholders and our employees will be better positioned for long-term success through a size and scale that spans the globe and offers diversity through product and exposure to the full energy value chain.

“The consolidated company will maintain its leadership position, driving further efficiencies through the combination of our adjacent, contiguous acreage in the Midland Basin and our highly talented employee base, with the improved ability to deliver durable returns, creating tangible value for shareholders for decades to come.”

The merger brings together Pioneer Natural Resources’ acreage of over 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins. As a result, the combined entity will possess an estimated resource of 16 billion barrels of oil equivalent in the Permian Basin.

In Q2 2023, Pioneer Natural Resources maintained an average daily oil production of 369,000 barrels (mbopd). In total, the company’s production for that period averaged 711,000 barrels of oil equivalent per day (mboepd).

Upon completion of the merger, ExxonMobil’s Permian production is projected to be more than double, reaching 1.3 million barrels of oil equivalent per day (MOEBD) based on 2023 figures. The expectations are to further increase it to nearly 2MOEBD by 2027.

ExxonMobil chairman and CEO Darren Woods said: “Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. 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.

“Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production.”

Both companies’ boards of directors have given their unanimous approval for the transaction, which is contingent on standard regulatory evaluations and approvals.

Additionally, the deal requires the consent of Pioneer Natural Resources’ shareholders. The anticipated timeline for the transaction’s completion is within the first half of 2024.

For ExxonMobil, Citi served as the primary financial advisor, with Centerview Partners providing financial advisory services, and Davis Polk & Wardwell acting as the legal advisor.

Pioneer Natural Resources took financial advisory support from Goldman Sachs, Morgan Stanley, Petrie Partners, and Bank of America Securities, while Gibson, Dunn & Crutcher served as its legal advisor.