With $64.5 billion merger in the works, ExxonMobil set on reinforcing US energy security and curbing emissions

U.S.-headquartered energy giant ExxonMobil is in the process of expanding its footprint in the U.S. even further, thanks to a definitive agreement to acquire Pioneer Natural Resources in an all-stock transaction, which has an implied total enterprise value, including net debt, of approximately $64.5 billion. The oil major believes that this deal will strengthen the U.S. economy and energy security while also contributing to net-zero goals.


The merger 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, creating – what the U.S. oil major deems to be – “the industry’s leading high-quality undeveloped U.S. unconventional inventory position.” This merger is an all-stock transaction valued at $59.5 billion, or $253 per share, based on ExxonMobil’s closing price on October 5, 2023.

However, the implied total enterprise value of the transaction, including net debt, is approximately $64.5 billion. Under the terms of the agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing.

Darren Woods, ExxonMobil Chairman and CEO, commented: “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. As importantly, as we look to combine our companies, we bring together environmental best-practices that will lower our environmental footprint and plan to accelerate Pioneer’s net-zero plan from 2050 to 2035.”

Integrated logistics connect high-value, light Permian crude from both companies to ExxonMobil’spremier refinery and chemical footprint on the U.S. Gulf Coast; Source: ExxonMobil
Integrated logistics connect high-value, light Permian crude from both companies to ExxonMobil’spremier refinery and chemical footprint on the U.S. Gulf Coast; Source: ExxonMobil

Following the merger, the two players will have an estimated 16 billion barrels of oil equivalent resources in the Permian. As a result, the oil major’s Permian production volume would more than double to 1.3 million barrels of oil equivalent per day (MOEBD), based on 2023 volumes, generating double-digit returns by recovering more resources, more efficiently and with a lower environmental impact. In line with this, ExxonMobil’s production will increase to approximately 2 moebd in 2027.

Scott Sheffield, Pioneer Chief Executive Officer, remarked: “The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin. 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.”

ExxonMobil, which expects to enhance field digitalization and automation that will optimize production throughput and cost, highlights that this merger transforms its upstream portfolio by increasing lower-cost-of-supply production, as well as short-cycle capital flexibility. Therefore, the company expects a cost of supply of less than $35 per barrel from Pioneer’s assets. By 2027, short-cycle barrels will comprise more than 40% of the total upstream volumes, positioning the company to more quickly respond to demand changes and increase capture of price and volume upside.

Shoring up energy security and net-zero boost

According to ExxonMobil, this merger represents the opportunity for even greater U.S. energy security by bringing “the best technology, operational excellence, environmental best practices, and financial capability to an important source of domestic supply, benefitting the American economy and its consumers.”

As the U.S. oil major plans to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions from its Permian unconventional operations by 2030, it intends to leverage its Permian greenhouse gas reduction plans to accelerate Pioneer’s net-zero emissions plan by 15 years, to 2035, as part of the transaction.

To this end, ExxonMobil will leverage the same strategy and apply its new technologies for monitoring, measuring, and addressing fugitive methane to lower both companies’ emissions footprint. Using combined operating capabilities and infrastructure, the firm expects to increase the amount of recycled water used in its Permian fracturing operations to more than 90% by 2030.

While the Boards of Directors of both companies have unanimously approved the transaction, it is still subject to customary regulatory reviews and approvals alongside approval by Pioneer shareholders. The merger is expected to close in the first half of 2024.

Citi acted as lead financial advisor, Centerview Partners as financial advisor, and Davis Polk & Wardwell as legal advisor to ExxonMobil. On the other hand, Goldman Sachs, Morgan Stanley, Petrie Partners, and Bank of America Securities acted as financial advisors to Pioneer while Gibson, Dunn & Crutcher LLP acted as legal advisors.

The merger increases short-cycle capital flexibility and lower-cost-of-supply production in the United States; Source: ExxonMobil
The merger increases short-cycle capital flexibility and lower-cost-of-supply production in the United States; Source: ExxonMobil

ExxonMobil is actively working on enriching its offshore hydrocarbon arsenal. In a bid to do so, the U.S. giant made a final investment decision for the Uaru project in the Stabroek Block off Guyana a few months ago. The company plans to have at least six FPSOs with a production capacity of more than 1 million gross barrels of oil per day online on the block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources.

In July 2023, ExxonMobil also received a stamp of approval for its 35-well exploration and appraisal drilling campaign on the Stabroek Block offshore Guyana from the country’s Environmental Protection Agency (EPA). This will enable the oil major to discover new and re-evaluate existing recoverable hydrocarbons from reservoirs in the block, enabling potential future development projects.