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ExxonMobil’s $60bn Acquisition of Pioneer: What Happened and What’s Next

Written by Kendrick Low

The finance world was abuzz with the news of ExxonMobil’s biggest acquisition since the 1990s- that of Pioneer Natural Resources, with a grand total of $59.5bn USD, the biggest since Exxon’s merger with Mobil in the late 1990s. This, according to Reuters, will expand its control over the Permian Basin, the most significant and highest-producing oil field in the US, with Pioneer being the largest well operator in the region, holding 9% of all production, whereas Exxon is the 5th largest operator here with 6%. This merger would make it the biggest producer in the region, securing a decade of low-cost production. Exxon CEO Darren Woods has hailed this as a ‘obvious’ ‘big opportunity’ for synergy between the two firms.

The plan, Exxon says, is to reduce costs via economies of scale, enabling the deployment of specialised and cutting-edge drilling and operational technologies over a wider scale. And the results are clear- it could add 700,000 barrels per day of new oil and gas within 4 years of the deal, raising output to 2 million barrels a day.

While ExxonMobil is pledging to adhere to climate best practices, climate activists, as reported by the Times of India, have scoffed at the deal due to the environmental implications of the sector, especially due to CEO Woods’ sticking to the firm’s high dependence of oil. Exxon has countered this via its $4.9bn all-stock deal for Denbury, a US oil company with a network of carbon dioxide pipelines and underground storage, which was intended to reinforce Exxon’s currently ‘nascent’ low-carbon venture.

However, this couldn’t have come at a better time. With the enduring Israel-Hamas war causing oil prices to skyrocket to highs of $85 per barrel, this could thus help relieve some of the pressure on other Western nations heavily dependent on Gulf states’ oilfields. However, this substantial bet on oil and gas isn’t guaranteed at all due to the impending climate transition.

On Pioneer’s end, CEO Scott Sheffield will earn a $29m exit package following the sale, and four other high Pioneer executives will earn a combined $42m in severance pay. Sheffield has promised its oilfield workers and most of the office workers will be offered Exxon jobs, or severance pay if they decline. Woods has supported this, stating there is no intention of ‘cutting [oil] rig operations, or people, or headcount’.

This has ultimately secured Exxon a huge position in Texas’ Permian Basin, allowing it to continuously pump out oil at cheaper and faster rates, reducing some of the supply shocks induced via oil and gas pressures from Russia and the Middle East alike. However, this may mean reduced incentives to support the green transition due to the gradual decreasing of oil prices. Thus, Exxon’s main objective now is to convince sceptics of its continued drive to implement climate policies and facilitate the green transition with increased action in these ventures.

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