Exxon Mobil’s acquisition of Pioneer Natural Resources to create over $1B in synergies

The acquisition of Irving-based Pioneer Natural Resources by ExxonMobil will create $1 billion in synergies early on and grow to $2 billion over the next decade, the two companies' executives said in a conference call with analysts Wednesday. 

ExxonMobil Chairman and CEO Darren Woods said Pioneer’s strength of operations and acreage in the Permian Basin in West Texas will create value surpassing either company’s capabilities on a standalone basis.

“With Pioneer’s acreage, and their very capable workforce, we saw a big opportunity to come together and do something that neither one of us can do independently,” Woods said on the call.

Two-thirds of the synergies from the Exxon-Pioneer deal will come from increased resource recovery, with the remaining third primarily from capital expenditure savings, Exxon officials said.

Spring, Texas-based Exxon Mobil Corp. (NYSE: XOM) is buying Pioneer (NYSE: PXD) in an all-stock deal valued at $59.5 billion, the companies announced Wednesday. It’s Exxon’s largest buyout since acquiring Mobil in 1999 and is aimed at creating a fracking powerhouse in West Texas.

The implications of the acquisition on Pioneer’s employees and headquarters campus in Irving were not directly addressed in the conference call, but Woods stressed that the goal of the deal is growth.

“Their organization [Pioneer] is delivering a lot of value with the work that they're doing,” he said. “We believe that we're delivering a lot of value with the work that we're doing. So when we bring these two together, it's not about cutting back. It’s about building up and frankly taking the advantages that each organization has and bringing that to bear.”

The primary goal is to grow production and shareholder returns, Woods said during the call.

"We're not looking at cutting either rig operations or people or headcount,” he said. “We're looking at how do we take the best of both operations and grow.”

Pioneer’s office in Irving will remain open for at least two years, according to a story in the Dallas Morning News quoting Pioneer’s CEO Scott Sheffield, who is retiring. The deal included conditions requiring that Exxon offer jobs to all of Pioneer’s office and field operation employees in Irving and Midland.

“Obviously we’re hoping long term that our employees will stay with Exxon Mobil,” Sheffield told the DMN. “It’s a great company.”

Pioneer topped the Dallas Business Journal’s 2023 North Texas Oil Production Companies List, ranked by Texas onshore oil production in 2022.

Exxon’s acquisition of Pioneer is subject to regulatory approval.

The acquisition, valued at $253 a share, makes Exxon the biggest producer in the largest oilfield in the United States.

Pioneer has more than 850,000 net acres in the Midland Basin portion of the Permian, while Exxon has 570,000 net acres in the Delaware and Midland basins of the Permian.

In the Permian, the combined company is expected to have an estimated 16 billion barrels of oil equivalent resource and production of 1.3 million barrels of oil equivalent per day — more than double Exxon's existing volume. By 2027, Exxon expects production to reach 2 million barrels of oil equivalent per day.

Exxon, previously based on a large campus in Irving, moved its global headquarters to a 385-acre campus in the Houston suburb of Spring in July, after announcing the move in January 2022.

Shortly after the move,  Exxon announced a $4.9 billion all-stock deal to acquire Plano-based Denbury Inc. (NYSE: DEN).