'Oil Giant' ExxonMobil Acquires Pioneer for 80 Trillion Won... This Year's Largest M&A

Global oil giant ExxonMobil has embarked on a mega corporate acquisition worth $60 billion (approximately 80.5 trillion KRW). This is the largest deal in the M&A (mergers and acquisitions) industry this year. Through this acquisition, ExxonMobil is evaluated to have solidified its position as the unrivaled crude oil producer in the United States.

[Image source=Reuters Yonhap News]

Local media including The Wall Street Journal (WSJ) reported on the 11th (local time) that ExxonMobil and U.S. shale oil driller Pioneer Natural Resources have finalized acquisition negotiations. The deal is valued at $59.5 billion, with a price of $253 per share. Accordingly, Pioneer shareholders will receive 2.3234 shares of ExxonMobil stock for each share they hold. The acquisition agreement is expected to be completed in the first half of next year.

Pioneer Natural Resources is a leading U.S. shale company that extracts oil and gas mixed in sedimentary rock layers. It ranks third in drilling volume in the Permian Basin, a major U.S. oil-producing region. Upon completion of this acquisition, ExxonMobil’s production in the Permian Basin is expected to double to 1.3 million barrels per day compared to the current level.

Darren Woods, CEO of ExxonMobil, said on the day, "The combined capabilities of the two companies will create much more long-term value than they could independently." Conscious of criticism that this acquisition runs counter to the trend of decarbonization, he added that the deal will help U.S. energy security and that they will seek exemplary environmental practices going forward. ExxonMobil plans to advance Pioneer’s target of net zero carbon dioxide emissions, originally set for 2050, to 2035.

ExxonMobil is considered one of the representative companies that benefited from rising oil prices last year. It earned profits amounting to $55.7 billion (approximately 74.7 trillion KRW) last year alone. Analysts say this profit base enabled the company to pursue this large-scale acquisition.

Meanwhile, on the morning of the same day in the New York stock market, ExxonMobil’s stock price fell more than 4.5% compared to the previous session following the acquisition news. In contrast, Pioneer’s stock price showed a slight gain.