Pioneer Natural Resources to Buy Parsley Energy for $ 4.5 Billion

Pioneer Natural Resources Co.

PXD -4.04%

Parsley has agreed to buy energy Inc.

P.E. 5.15%

For $ 4.5 billion, the US is the latest in a hawk of oil tie-ups as companies seek weather at low prices by the coronovirus epidemic.

The all-stock deal valued Parsley at a 7.9% premium to its closing price on Monday and it would reinforce Pioneer’s place as one of the largest producers in the Permian Basin of Texas and New Mexico, the leading US oilfield.

Pioneer chief executive Scott Sheffield said that size and scale would be critical to surviving as an independent oil and gas producer as the world shies away from fossil fuels.

“Actually there are going to be three or four players in the independent region of America,” he said in an interview on Tuesday.

The Wall Street Journal reported on Monday that negotiations were underway for a combination of the companies. Parsley’s shares rose nearly 5% on Tuesday, as Pioneer’s stock fell nearly 4%.

The deal comes a day after ConocoPhillips COP -0.37%

Concho agreed to buy resources Inc.

CXO -0.32%

For $ 9.7 billion. Last month, Devon Energy Corp.

DVN 1.24%

$ 2.6 billion merger agreed with WPX Energy Inc.

WPX 0.88%

While chevron Corp.

CVX 0.56%

In July agreed to buy Noble Energy Inc. for $ 5 billion.

“The combination of Parsley and Pioneer creates an organization to create a strong new link at the bottom end of the global cost curve,” Parsley Chief Executive Matt Gallagher said in a statement. He is set to join the board of directors of the combined company.

Mr. Sheffield is the father of Brian Sheffield, Pioneer’s co-founder and president, head of Pioneer. Pioneer President J. Kenneth Thompson said in an interview that neither Scott Sheffield nor Brian Sheffield were allowed to participate in the deal negotiations.

Scott Sheffield said he was also barred from discussing the acquisition with officials.

Pioneer said it expects the combined company to save $ 325 million annually by reducing administrative expenses and other costs.

The deal, which is expected to close early next year, is subject to approval from shareholders of both companies. The companies said that Quantum Energy Partners supports Parsley’s largest shareholder combination, with a 17% stake.

Write Rebecca Elliott at [email protected]

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