ExxonMobil acquired Pioneer Natural Resources in an all-stock deal valued at $59.5 billion, or $253 per share. The transaction will give ExxonMobil a significant stake in the U.S. energy sector, which both companies say will have a positive impact on sustainability. attempt.
According to ExxonMobil, the acquisition will combine Pioneer’s inventory and watershed knowledge with Exxon’s technology, financial resources and project development capabilities to improve profitability, increase efficiency and reduce environmental impact. It is said to become.
The deal, reportedly the biggest merger and acquisition deal of the year, will give ExxonMobil even more control over the Permian Basin. The deal combines Pioneer’s 850,000 net acres in the Midland Basin and ExxonMobil’s 570,000 acres in Delaware and the Midland Basin, with approximately 1.6 billion net acres of available oil in the Permian. Equivalent to a barrel. This will double ExxonMobil’s Permian production to 1.3 million barrels per day based on 2023 production.
“Pioneer is the clear leader in the Permian with a unique asset base and talent with deep industry knowledge,” said Darren Woods, ExxonMobil Chairman and CEO. “The combined capabilities of both companies will enable long-term value creation that far exceeds the capabilities of either company alone.”
Pioneer shareholders will receive 2,324 ExxonMobil shares for each Pioneer share upon closing, giving the transaction an implied total value of approximately $64.5 billion.
Merger could support environmental goals of both companies
As part of the merger, ExxonMobil plans to bring Pioneer’s greenhouse gas reduction plans forward by 15 years, setting a target for net-zero Scope 1 and 2 emissions by 2035. The site adjacent to Pioneer will reportedly allow ExxonMobil to drill long laterals, or horizontal sections. This can result in fewer wells and a smaller overall surface footprint.
ExxonMobil also plans to use its technology to monitor and reduce methane emissions from its Permian operations, a highly potent emissions that is more than 25 times more harmful than carbon emissions. . Finally, the company has set a goal of increasing the use of recycled water used in Permian fracking operations by 90% by 2030.
“Pioneer’s Tier 1 sites are highly contiguous, providing greater opportunities to deploy our technology, improving operational and capital efficiencies and significantly increasing production,” Woods said. I am. “Importantly, as we consider combining our two companies, we plan to bring together environmental best practices that reduce our environmental footprint and accelerate Pioneer’s net zero plan from 2050 to 2035.”
ExxonMobil Requires Emissions Reductions for Oil & Gas Industry
Oil and gas operations account for about 15% of the world’s energy-related emissions, and according to the International Energy Agency, oil and gas emissions intensity must be reduced by 50% by the end of 2020. The IEA estimates that reaching this goal will require upfront investment of $600 billion, equivalent to a portion of oil and gas producers’ revenues starting in 2022.
According to ExxonMobil’s recent Global Outlook Report, oil and gas will still be needed for heavy industry even if electric vehicles become widespread. The report predicts that based on current trends, oil and gas will still account for half of the world’s energy supply in 2050. Nevertheless, the industry reportedly needs to find additional avenues to reduce operational emissions to meet global targets. The report recommends expanding carbon capture technologies, along with the use of hydrogen fuels and biofuels, to reduce emissions.
ExxonMobil’s net-zero goals should help reduce oil and gas-related operational emissions in the coming years, especially as ExxonMobil becomes increasingly well-known throughout the industry.