Regarded as the largest non-government-owned company in the energy industry, Exxon Mobil Corp is said to have had discussions with Pioneer Natural Resources Company, the American company that operates in hydrocarbon exploration, about a possible acquisition of the company by Exxon according to sources close to the company.
They also added that the discussions regarding the possible acquisition of the company are informal and that there had been no final decision yet.
According to the reports of their profit, Exxon has generated quite a considerable amount in terms of profit and is trying to figure out a way to make its presence strong in the oil and gas industry in the United States.
In order to expand its control and strength in the industry, the company is currently on the lookout to find ways that would ensure its strong presence in the West Texas area.
Sources close to the company also reported that Exxon had discussions with different companies and that there was no formal process involved between Exxon and Pioneer.
While there is no official confirmation of any kind of deal between the companies, it is expected that the deal will come into action only later this year or next year, according to the sources.
They also said that the deal will not change into any kind of formal negotiations and that Exxon may pursue any other companies if the deal would turn into one.
The recent developments at Exxon state that the company is on the lookout for a suitable deal using the revenue generated last year and that the Dallas-based Pioneer was their primary target.
If the accusation of Pioneer by Exxon for a market cap of around $49 million is ever to happen, then it would be recorded as the largest acquisition ever by the company after its deal with Mobil Corp. in 1999.
Also, the acquisition of the company will provide Exxon advantages like having a strong base in the West Texas and New Mexico area that is known for the oil-rich Permian Basin.
According to the future plans of Exxon, having a strong base in the mentioned area is a critical part too, which makes the deal much more important to the company.
Pioneer is one of the major companies that operate in the hydrocarbon exploration area and if the deal between Exxon and Pioneer is to take place, then it would be one of the largest deals in the U.S. oil industry, considering the size of the company.
Some of the recent deals in the industry like the purchase of Anadarko Petroleum Corp. by Occidental Petroleum Corp. for $38 billion in 2019 and also the purchase of XTO Energy by Exxon for $30 billion in 2010 will be topped by the current deal if the deal is finalized with Pioneer.
Like Exxon, Pioneer also generated a considerable amount of profit last year. According to the reports, the revenue generated by Pioneer as a profit was around $8.4 billion. The generated amount was sent out to the shareholders of the company in the form of dividends and share repurchases.
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Currently, Pioneer is the largest oil producer that is operating in the Permian area and Exxon is only the sixth largest company in the area. So, acquiring Pioneer is always an advantage to Exxon in strengthening its base in the area.
Many popular websites and reports claim that Pioneer has some of the best assets possessed by a company in the Permian. So, through a successful deal with Pioneer, Exxon will have access to these sites, which are said to be some of the best economic drilling locations.
These locations were acquired by Pioneer through their deal with Parsley Energy Inc. and Double Point Energy. These were two companies that primarily operated in the area before Pioneer and were acquired by Pioneer in 2021 for a combined value of around $11 billion.
As for oil companies like Exxon, it has been a rough time as there are doubts from the side of the shareholders about the possible future of the industry as there is a decline in the demand for oil and gas in recent years.
The companies have struggled to convince these shared holders into investing in mega projects as they are not sure about the future of the industry. Along with these speculations from the side of the investors, the company also faces additional challenges in recent years,
Adding to this the Kremlin wiped out Exxon’s stake in a massive project that was targeted in the Far East of Russia. The company has also ended its drilling campaign in the deep waters of Brazil as it failed to find a commercially viable oil and gas deposit.
Even though Exxon still has active operations in Brazil, the failure has caused a minute setback for the company in the country where they have operated and functioned for years. The new deal, if it is ever finalized, is said to boost and cover up the recent fallouts like these that have happened to Exxon.
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