The American oil giant ExxonMobil is taking a decisive turn to strengthen its position in shale oil and gas, with the purchase announced Wednesday of its compatriot Pioneer Natural Resources, heavyweight in the sector, for around 60 billion US dollars.
This is the largest acquisition for ExxonMobil since the mega merger with Mobil in 1999.
This acquisition, which is expected to be finalized during the first half of 2024, will give ExxonMobil – already one of the largest oil groups in the world – a strengthened foothold in the Permian Basin.
The production of this immense oil region, which covers west Texas and southeastern New Mexico, represents 5.8 million barrels of oil per day, or approximately 45% of American production.
In detail, ExxonMobil intends to finance the purchase of the Texan company Pioneer entirely in shares for $59.5 billion, based on ExxonMobil’s closing price on October 5.
The total transaction, including debt, is valued at approximately $64.5 billion, the companies said.
ExxonMobil thus intends to more than double the volume of its daily production of barrels of oil equivalent in the Permian basin, to reach 1.3 million barrels per day upon finalization of the acquisition, then around 2 million in 2027.
The group posted a total production of 3.7 million barrels of oil equivalent per day in 2022.
The “highly contiguous” drilling area of the two companies will allow “greater opportunities to deploy our technologies, ensuring operational and financial efficiency as well as a significant increase in production”, underlined Darren Woods, boss of ExxonMobil, cited in the press release.
JP Morgan analysts called the deal “strategically logical” because it “increases ExxonMobil’s Perm footprint, which was smaller than peers Chevron and ConocoPhillips.”
It also allows the group to improve quality and apply its production techniques to Pioneer lands, they added in a note.
Environment
Both companies have outlined their goal of achieving carbon-neutral Pioneer production in the Permian Basin as early as 2035, rather than 2050.
They could nevertheless attract the wrath of environmental defenders, at a time when calls to move away from fossil fuels are increasing around the world, against a backdrop of the fight against global warming.
Large global private oil groups (including Shell, ExxonMobil and BP) are the target of criticism, even lawsuits, for their continued investments in hydrocarbons.
A study published in January in the journal Science hit the nail on the head, showing that as early as the 1980s, ExxonMobil had remarkably accurate climate change forecasts, produced by its own scientists.
Despite this, the company has for years publicly cast doubt on the state of scientific knowledge on the subject.
Controversial fracking
Oil production in the Permian Basin has a long history, with the first wells dating back to 1920. The region then boomed in the 1970s, before experiencing a steady decline.
The boom in the exploitation of shale reserves in the 2010s revived the regional economy, thanks to hydraulic fracturing and new drilling techniques making the exploitation of deposits more affordable.
However, environmental advocates have long argued that hydraulic fracturing causes earthquakes and carries pollution risks, with limited immediate energy production potential.
This rapprochement comes as oil is currently trading around $85 per barrel, a historically high level.
ExxonMobil earned a record net profit of nearly $56 billion in 2022 thanks to the sharp rise in hydrocarbon prices linked to the recovery in demand and the drying up of Russian supply.
For its part, Pioneer Natural Resources, headquartered in Dallas (Texas), generated a net profit of $7.8 billion in 2022 for a turnover of more than $24 billion.
ExxonMobil shares fell 3.78% to $106.28 on Wednesday on the New York Stock Exchange, while Pioneer gained 0.65% to $238.95.
With Marie-Morgue Le Moel, in Paris