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When the deal closes, it will make big oil’s biggest player the dominant producer in shale oil.Exxon Mobil Corp. agreed Wednesday to buy Irving-based Pioneer Natural Resources Co. for $59.5 billion, the supermajor’s largest takeover in more than two decades, as it seeks to become the dominant producer of shale oil.
The agreement will greatly expand Exxon’s inventory of yet-to-be-drilled sites in the world’s biggest shale basin, giving it access to a vast number of potential onshore wells that, unlike deepwater ones, can be brought online within months and make Exxon far more nimble at keeping pace with erratic global demand.The combined company will control the equivalent of 16 billion barrels of crude reserves in the Permian region, according to the statement.
Supermajors initially shunned the Permian because they were skeptical the wells there could produce sufficient crude over a long enough period of time to yield big profits. It became clear, however, that low-cost, easy-to-drill shale wells enabled companies to quickly ramp up production when needed. It marked a revolutionary departure from Big Oil’s offshore mega projects that cost billions of dollars and require a decade of planning.
The war in Ukraine changed the landscape. Exxon had already been pulling back on spending, cutting costs and reaping the benefits of pandemic-era investments. Then Russia’s invasion sent oil prices surging. Exxon’s profits jumped to a record $59 billion in 2022. Its stock gained more than 80% last year, providing the financial firepower for a era-defining deal with Pioneer.The deal is apt to face tough antitrust scrutiny from the Federal Trade Commission.
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