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Exxon Mobil Corporation (XOM - Free Report) is in preliminary talks to acquire U.S. shale gas explorer Pioneer Natural Resources , per the Wall Street Journal.
ExxonMobil’s acquisition of Pioneer could be worth $60 billion and be finalized within days. At that size, the deal can become the largest acquisition globally for the year.
The acquisition will likely be ExxonMobil’s largest merger after the one with Mobil Corporation in 1999. The acquisition will offer XOM a leading position in the Permian Basin, an area crucial to its growth plans.
The agreement would bring together two major landholders in the Permian Basin of Texas and New Mexico, solidifying ExxonMobil’s position as the dominant producer in the oil field by a significant margin.
The acquisition would significantly expand ExxonMobil’s inventory of high-quality drilling sites within the basin, ensuring a stable and cost-effective source of crude oil well into the future, potentially extending beyond 2050. This extended supply will support and sustain its extensive refinery network along the Gulf Coast.
ExxonMobil has been actively seeking acquisitions in the Permian basin for years but faced timing challenges. The pandemic-related oil price drops and increased spending on global projects strained its finances, leading to significant borrowing for shareholder dividends.
Following expenditure reductions, cost-cutting measures and leveraging the gains from pandemic-era investments, ExxonMobil experienced a remarkable surge in profits, reaching a record-breaking $59 billion in 2022.
Additionally, the company’s stock witnessed significant growth by surging more than 80% last year. This substantial financial growth has positioned ExxonMobil with the financial capability to potentially undertake a transformative transaction with Pioneer.
Pioneer is the largest oil producer in the Permian Basin. In 2022, PXD produced an average of 650,000 barrels of oil equivalent per day in the basin. This is about 100,000 more than what ExxonMobil produced in the region last year.
Pioneer owns some of the high-quality assets in the Permian Basin. PXD’s recent acquisitions can stand for about 30 years of premium inventory. With the acquisition, ExxonMobil will have a vast inventory of economic drilling locations Pioneer gathered through the acquisitions of Parsley Energy Inc. and DoublePoint Energy, which had also drilled in the Permian Basin.
Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Patterson-UTI Energy (PTEN - Free Report) is one of the largest North American land drilling contractors, having a large, high-quality fleet of drilling rigs. The company has a comfortable debt maturity profile with no major debt outstanding until 2028.
Patterson-UTI has witnessed upward earnings estimate revisions for 2023 and 2024 in the past seven days. The consensus estimate for PTEN’s 2023 and 2024 earnings per share is pegged at $1.52 and $1.68, respectively.
APA Corporation (APA - Free Report) boasts a large, geographically diversified reserve base with multi-year trends in reserve replacement. The company is using the excess cash to reward shareholders with dividends and buybacks. APA bought back 1.3 million shares at $33.72 apiece in the second quarter. The company also shelled out $77 million in dividend payments.
APA Corp has witnessed upward earnings estimate revisions for 2023 and 2024 in the past seven days. The consensus estimate for APA’s 2023 and 2024 earnings per share is pegged at $4.64 and $6.28, respectively.
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ExxonMobil (XOM) Considers Pioneer Shale Driller Acquisition
Exxon Mobil Corporation (XOM - Free Report) is in preliminary talks to acquire U.S. shale gas explorer Pioneer Natural Resources , per the Wall Street Journal.
ExxonMobil’s acquisition of Pioneer could be worth $60 billion and be finalized within days. At that size, the deal can become the largest acquisition globally for the year.
The acquisition will likely be ExxonMobil’s largest merger after the one with Mobil Corporation in 1999. The acquisition will offer XOM a leading position in the Permian Basin, an area crucial to its growth plans.
The agreement would bring together two major landholders in the Permian Basin of Texas and New Mexico, solidifying ExxonMobil’s position as the dominant producer in the oil field by a significant margin.
The acquisition would significantly expand ExxonMobil’s inventory of high-quality drilling sites within the basin, ensuring a stable and cost-effective source of crude oil well into the future, potentially extending beyond 2050. This extended supply will support and sustain its extensive refinery network along the Gulf Coast.
ExxonMobil has been actively seeking acquisitions in the Permian basin for years but faced timing challenges. The pandemic-related oil price drops and increased spending on global projects strained its finances, leading to significant borrowing for shareholder dividends.
Following expenditure reductions, cost-cutting measures and leveraging the gains from pandemic-era investments, ExxonMobil experienced a remarkable surge in profits, reaching a record-breaking $59 billion in 2022.
Additionally, the company’s stock witnessed significant growth by surging more than 80% last year. This substantial financial growth has positioned ExxonMobil with the financial capability to potentially undertake a transformative transaction with Pioneer.
Pioneer is the largest oil producer in the Permian Basin. In 2022, PXD produced an average of 650,000 barrels of oil equivalent per day in the basin. This is about 100,000 more than what ExxonMobil produced in the region last year.
Pioneer owns some of the high-quality assets in the Permian Basin. PXD’s recent acquisitions can stand for about 30 years of premium inventory. With the acquisition, ExxonMobil will have a vast inventory of economic drilling locations Pioneer gathered through the acquisitions of Parsley Energy Inc. and DoublePoint Energy, which had also drilled in the Permian Basin.
Zacks Rank & Key Picks
ExxonMobil currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Patterson-UTI Energy (PTEN - Free Report) is one of the largest North American land drilling contractors, having a large, high-quality fleet of drilling rigs. The company has a comfortable debt maturity profile with no major debt outstanding until 2028.
Patterson-UTI has witnessed upward earnings estimate revisions for 2023 and 2024 in the past seven days. The consensus estimate for PTEN’s 2023 and 2024 earnings per share is pegged at $1.52 and $1.68, respectively.
APA Corporation (APA - Free Report) boasts a large, geographically diversified reserve base with multi-year trends in reserve replacement. The company is using the excess cash to reward shareholders with dividends and buybacks. APA bought back 1.3 million shares at $33.72 apiece in the second quarter. The company also shelled out $77 million in dividend payments.
APA Corp has witnessed upward earnings estimate revisions for 2023 and 2024 in the past seven days. The consensus estimate for APA’s 2023 and 2024 earnings per share is pegged at $4.64 and $6.28, respectively.