Forbes Story: ExxonMobil Becomes The Biggest Big Dog In The Permian Basin

[Note: This story is also published at Forbes.com]

The process of consolidation in the U.S. shale business took a giant leap Wednesday with ExxonMobil’sXOM announcement it will merge with Permian Basin pure-play company Pioneer Natural ResourcesPXD in an all-stock deal valued at $59.5 billion, or $253 per share. Exxon said in a release that the implied total value of the enterprise is $64.5 billion, including net debt.

A Deal That Checks Off All The Boxes

ExxonMobil CEO Darren Woods said that this long-anticipated merger with Pioneer ticks off a number of key boxes for any company seeking to grow through mergers and acquisitions in the shale space: An outstanding work force, long-term value creation, a high volume of tier-one acreage that is highly contiguous to Exxon’s own acreage base, and opportunities to create value through efficiency gains and economies of scale.

“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” said Woods. “Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production.”

The merger with ExxonMobil will no doubt become seen as the crowning achievement of Pioneer CEO Scott Sheffield, who announced in April that he would retire from the company at the end of this year. Sheffield had retired as CEO once before, in 2016, before returning to the position in 2019 to lead the company through its transition from a company with a wide array of domestic and international assets to a pure-play Permian Basin producer.