The transaction will give the Texan oil and gas company a contiguous position of nearly 97,000 net acres in the Midland Basin
US-based Pioneer Natural Resources has agreed to acquire Midland Basin operator DoublePoint Energy in a stock-cum-cash deal worth approximately $6.4bn.
The company will issue around 27.2 million of its shares plus $1bn in cash to DoublePoint Energy’s shareholders. The consideration also covers DoublePoint Energy’s debt and liabilities, which total around $900m.
DoublePoint Energy, which has a multi-rig horizontal development programme in the Midland Basin in Texas, had drilled over 170 horizontal wells, as of September 2020.
It was created in 2018 as a pure-play Midland Basin operator by Double Eagle Energy Holdings III and FourPoint Energy. The company’s investors include Apollo Global Management, Quantum Energy Partners, Magnetar Capital, and GSO Capital Partners.
DoublePoint Energy co-CEOs Cody Campbell and John Sellers said: “We are proud and appreciative of the work that our team has done to build a company and an asset base that is unparalleled in quality and truly cannot be replicated.
“We are honoured to have the opportunity to combine our business with Pioneer, who we have long admired and regard as the premier operator in the Midland Basin. The fit and the synergies are clear, and we look forward to working with Pioneer to continue creating value.”
Pioneer Natural Resources said that the transaction will result in a contiguous position of nearly 97,000 net acres that directly offsets and overlaps its existing presence in the Midland Basin.
Furthermore, the Texas-based company said that the acreage to be added to its portfolio is predominantly undrilled and supplements its asset base. The transaction will help Pioneer Natural Resources to grow its acreage position to over one million net acres with no exposure to US government-owned lands.
The company expects the acquired assets to produce approximately 100,000 barrels of oil equivalent per day by the end of the second quarter of 2021.
Pioneer Natural Resources CEO Scott Sheffield said: “DoublePoint has amassed an impressive, high quality footprint in the Midland Basin, comprised of tier one acreage adjacent to Pioneer’s leading position.
“We are pleased with their decision to become long-term partners with Pioneer in a transaction that will complement our unmatched position in the core of the Permian Basin.
“Pioneer will incorporate these assets into our investment model, migrating the assets from significant production growth to a free cash flow model, moderating growth for the U.S. shale industry and generating significant value for our shareholders.”
Following the acquisition, Pioneer Natural Resources’ existing shareholders will hold a stake of around 89% stake, while DoublePoint Energy’s shareholders will own the remaining stake of 11%.
The deal, which is subject to regulatory approvals and customary closing conditions is expected to be concluded in Q2 2021.
It follows Pioneer Natural Resources’ all-stock transaction announced in late 2020 to acquire rival shale producer Parsley Energy for $7.6bn. The deal was subsequently closed earlier this year.