Fracking titan rises with $ 6.4 billion acquisition as oil prices rebound

The “complementary” acquisition will extend Pioneer’s already industry-leading footprint in the Permian Basin, the largest US oil field., located in Southeastern New Mexico and West Texas. It’s a show of confidence as oil prices recover from the pandemic.
“DoublePoint has accumulated an impressive and high-quality footprint in the Midland Basin,” the eastern part of the Permian Basin, Pioneer CEO Scott Sheffield said in a statement, adding that the agreement “will complement our unparalleled position in the heart of the basin permian. “

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 one million net acres, the company said.

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

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The deal comes as energy companies struggle to recover from last year’s low oil prices and heavy losses caused by the pandemic. Companies that have remained relatively healthy have stepped up their merger and acquisition activity in the region as oil prices rise and the economy reopens. This is the second recent purchase by Pioneer (PXD) – in October, he spent $ 4.5 billion to buy Parsley Energy.

“It’s somewhat surprising to see Pioneer announce another major acquisition so soon after Parsley’s deal, but the company may have felt the assets were just too close to where they are today to be left out. “, Andrew Dittmar, Senior M&A Analyst. with data analytics company Enverus, said in email comments.

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

Pioneer stock 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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