Fracking titan is growing with $ 6.4 billion acquisition as oil prices rebound

Fracking titan is growing with $ 6.4 billion acquisition as oil prices rebound

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The bolt-on acquisition will expand Pioneer’s already industry-leading presence in the Permian Basin, the largest oil field in the United States, located in southeastern New Mexico and western Texas. It is a demonstration of confidence as oil prices recover from the pandemic.
“DoublePoint has accumulated an impressive high-quality footprint in the Midland Basin,” said Pioneer CEO Scott Sheffield in a statement, adding that the deal “will complement our unrivaled position in the center of the Permian Basin.”

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

She expects the new area to be producing around 100,000 barrels of oil per day by the end of the second quarter.

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The deal comes as energy companies work to recover from last year’s low oil prices and huge losses caused by the pandemic. Companies that have remained relatively healthy have increased merger and acquisition 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 announcing another major acquisition shortly after the Parsley deal, but the company may have felt that the assets were simply too close to their existing position to pass up,” said Andrew Dittmar, senior merger and merger analyst. acquisitions with data analytics firm Enverus, said in comments by email.

Pioneer expects the merger to help save about $ 175 million in annual costs, or a total of about $ 1 billion in 10 years. This will likely allow the company to return more money to shareholders.

Pioneer shares closed more than 3.5% 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 in debt and liabilities.

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