Fracking Titan Rises With $ 6.4 Billion Acquisition As Oil Prices Rebound

The “bolted” acquisition will expand Pioneer’s already industry-leading footprint in the Permian Basin, the largest oil field in the US., located in southeastern New Mexico and western Texas. It’s a show of confidence as oil prices rebound from the pandemic.
“DoublePoint has built an impressive, high-quality footprint in the Midland Basin,” said Pioneer CEO Scott Sheffield in the eastern portion of the Permian Basin, adding that the agreement “will complement our unrivaled position at the core. of the Permian Basin.. “

The deal will give Pioneer access to approximately 97,000 contiguous net acres of mostly undrilled land, bringing Pioneer’s total position to more than 1 million net acres, the company said.

He expects the new acreage to produce around 100,000 barrels of oil a day by the end of the second quarter.

America's most powerful oil lobby is changing its mind on a carbon tax
The deal comes as energy companies work to recover from last year’s low oil prices and heavy losses caused by the pandemic. Companies that remained relatively healthy have increased M&A activity in the region as oil prices rise and the economy reopens. This is the second recent purchase of Pioneer (PXD) – in October, it spent $ 4.5 billion to buy Parsley Energy.

“It is somewhat surprising to see Pioneer announce another major acquisition so soon after the Parsley deal, but the company may have felt that the assets were simply too adjusted to their current position to pass up,” Andrew Dittmar, senior mergers and acquisitions analyst . with data analytics firm Enverus, it said in emailed comments.

Pioneer expects the merger to help it save an estimated $ 175 million in annual costs, or a total of approximately $ 1 billion over 10 years. That will likely allow the company to return more cash to shareholders.

Pioneer shares closed more than 3.5% higher on Thursday.

The deal is expected to close in the second quarter of 2021 and includes 27.2 million Pioneer shares, $ 1 billion in cash and the assumption of approximately $ 900 million of debt and liabilities.


Source link