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DALLAS – (BUSINESS WIRE) –Pioneer Natural Resources Company (NYSE: PXD) (“Pioneer” or “the Company”) today announced that it has entered into a definitive purchase agreement to acquire the leasehold interests and related assets of DoublePoint Energy (DoublePoint) in a transaction valued at approximately 6 , $ 4 billion as of April 1, 2021, consisting of approximately 27.2 million Pioneer common shares, $ 1 billion in cash and assumption of approximately $ 0.9 billion in debt and liabilities.
Scott D. Sheffield, CEO of Pioneer, said: “DoublePoint has amassed an impressive, high-quality footprint in the Midland Basin, comprising first-level acreage adjacent to Pioneer’s leadership position. We are pleased with their decision to become long-term partners with Pioneer in a transaction that will complement our unrivaled position in the heart of the Permian Basin. Pioneer will integrate these assets into our investment model, migrating assets from significant production growth to a free cash flow model, moderating the growth of the U.S. shale industry and generating significant value for our shareholders. . ”
The transaction improves the investment framework
- Accreditation to key financial indicators – Pioneer expects the transaction to be accretive on key financial metrics including cash flow and free cash flow per share, earnings per share and corporate returns in 2021 and beyond.
- Increases the prospects for a variable dividend – In accordance with Pioneer’s priority to return the capital to shareholders, the accretive nature of this transaction on free cash flow leads to an increase in the variable dividend per share expected from 2022 and beyond.
- Unparalleled Permian Scale – This transaction represents a contiguous position of approximately 97,000 net high quality acres offsetting and directly overlapping Pioneer’s current footprint. The acquired acreage is predominantly undrilled and increases Pioneer’s premium asset base, increasing the company’s acreage to over one million net acres with no exposure to federal lands. The company expects production from the acquired assets to reach approximately 100,000 barrels of oil equivalent per day by the end of the second quarter.
- Important synergies – The acquisition is expected to result in annual savings of approximately $ 175 million through operational efficiencies and reductions in general and administrative (G&A) and interest expenses. The expected present value of these cost savings is approximately $ 1 billion over 10 years.
- Senior balance sheet maintained – Pioneer’s pro forma leverage parameters will remain relatively unchanged, among the lowest in the industry, preserving the financial and operational flexibility of the company and allowing a significant return of capital to shareholders.
Geoffrey Strong, Senior Partner and Co-Head of Infrastructure and Natural Resources at Apollo, said: “The combination of Pioneer and DoublePoint is compelling from a financial and operational point of view and is a natural fit for DoublePoint. This acquisition continues the trend of consolidation in the prolific Permian Basin, combining two complementary footprints in one transaction with both upper and lower synergies. “Dheeraj Verma, President of Quantum Energy Partners added:”We strongly believe in Pioneer’s strategy of generating free cash flow, which provides a competitive basis and a strong variable dividend. ”
Cody Campbell and John Sellers, Co-CEOs of DoublePoint Energy, said: “We are proud and grateful for the work our team has done to build a business and asset base of unmatched quality that truly cannot be replicated. We are honored to have the opportunity to combine our business with Pioneer, whom we have long admired and consider to be the premier operator in the Midland Basin. The fit and synergies are clear, and we look forward to working with Pioneer to continue to create value. ”
transaction details
Pioneer will issue approximately 27.2 million common shares as part of the transaction with an additional $ 1 billion in cash. After closing, the existing shareholders of Pioneer will own approximately 89% of the combined company and the existing owners of DoublePoint will own approximately 11% of the combined company. Pioneer plans to fund the cash portion of the purchase price by combining cash on hand and existing borrowing capacity under its revolving credit facility.
The transaction has been unanimously approved by Pioneer’s board of directors and is expected to close in the second quarter of 2021, subject to customary closing conditions and regulatory approvals.
The transaction is structured as the acquisition by a subsidiary of Pioneer of 100% of the limited liability company interests of DoublePoint’s 100% subsidiary, Double Eagle III Midco 1 LLC.
Web Chat
In conjunction with this press release, the company has posted a pre-recorded webcast and associated investor presentation on its website.
To view the webcast and accompanying presentation, visit www.pxd.com> Investors> Profits and Webcasts.
To access the presentation slides, visit www.pxd.com> Investors> Investor Presentations.
The webcast will be archived on the Pioneer website and can be viewed here. This replay will be available until April 27, 2021.
Pioneer is a large independent oil and gas exploration and production company headquartered in Dallas, Texas, and operating in the United States. For more information, visit the Pioneer website at www.pxd.com.
DoublePoint Energy is a Fort Worth, Texas-based upstream oil and gas company led by the Double Eagle management team in partnership with FourPoint Energy. DoublePoint is backed by equity commitments from Apollo Global Management, Inc. (NYSE: APO), Quantum Energy Partners, Magnetar Capital and GSO Capital Partners, LP.
Caution regarding forward-looking information
Except for historical information contained in this press release, the statements contained in this press release are forward-looking statements that are made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and statements Pioneer’s business outlook is subject to a number of risks and uncertainties that could cause Pioneer’s actual results in future periods to differ materially from forward-looking statements. These risks and uncertainties include, among others, the risk that the activities of companies will not be integrated successfully; the risk that the cost savings, synergies and growth resulting from the proposed transaction will not be fully realized or will take longer than expected; the diversion of management time on transaction-related issues; the effect of future regulatory or legislative actions on companies or the sectors in which they operate, including the risk of further restrictions on development activities on company assets; the risk that Pioneer’s credit ratings will differ from what the company expects; the risk that a party to the transaction will not be able to obtain the required government and regulatory approvals for the proposed transaction, or that the required government and regulatory approvals could delay the proposed transaction or result in the imposition of conditions that could reduce the expected benefits of the transaction. proposed transaction or cause the parties to abandon the proposed transaction; the risk that a condition to the closing of the proposed transaction will not be met; the time required to complete the proposed transaction, which may be longer than expected for various reasons; potential liability resulting from ongoing or future litigation; changes in the general economic environment, or social or political conditions, which could affect businesses; the potential impact of the announcement or completion of the proposed transaction on relationships with customers, suppliers, competitors, management and other employees; the effect of this communication on the Pioneer share price; transaction costs; volatility of commodity prices; supply and demand for products; the impact of a generalized epidemic of a disease, such as the COVID-19 pandemic, on global and US economic activity; competition; the ability and timing to obtain environmental and other permits; the ability to obtain third party approvals and negotiate agreements with third parties on mutually acceptable terms; potential liability resulting from ongoing or future litigation; the costs and results of drilling and operations; the availability of equipment, services, resources and personnel necessary to carry out the drilling and operations activities of the companies; access and availability of transportation, processing, fractionation, refining, storage and export facilities; Pioneer’s ability to replace reserves; implement its business plans or complete its development activities as planned; access to capital and cost of capital; the financial strength of the counterparties to the Pioneer credit facility, investment instruments and derivative contracts and buyers of the Company’s oil, natural gas liquids and gas production; uncertainties in reserve estimates; identification of drilling locations and the possibility of adding proven reserves in the future; assumptions underlying forecasts, including production, cash flow, well cost, capital expenditure, rate of return, expense, cash flow and purchase cash flow forecasts and sales of oil and gas, net of firm transportation commitments; funding sources; tax rates; quality of technical data; environmental and meteorological risks, including the possible effects of climate change; cybersecurity risks; risks associated with the ownership and operation of the Company’s oilfield service activities and acts of war or terrorism. These and other risks are described in Pioneer’s annual report on Form 10-K for the year ended December 31, 2020, in quarterly reports on Form 10-Q filed thereafter and in other filings with the United States Securities and Exchange Commission. In addition, the companies may be exposed to currently unforeseen risks which could have a material adverse effect on the combined company. Therefore, no assurance can be given that actual events and results will not differ materially from the expected results described in forward-looking statements. Pioneer assumes no obligation to publicly update these statements, except as required by law.
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