Pioneer Natural Resources Company stock jumped in the pre-market trading Friday after multiple media reports suggested that Exxon Mobil Corporation (NYSE: XOM) is close to finalizing a deal to acquire the shale giant for $60 billion.
Exxon Mobil’s interest in Pioneer (NYSE: PXD), initially reported earlier this year, now appears to be taking a concrete form. Sources suggest that the oil and energy giant could announce a formal takeover in the coming days, potentially valuing the Irving, Texas-based shale producer at a substantial premium of 20% to its Thursday closing share price.
This proposed takeover, if successful, would mark one of the most significant mergers since Exxon and Mobil joined forces in an $81 billion deal in 1999. It would also claim the title of the largest deal of the year in U.S. markets, surpassing Pfizer’s (NYSE: PFE) $43 billion acquisition of cancer specialists Seagen Inc. (NASDAQ: SGEN) in early March.
The potential merger would bring together two of the largest acreage holders in the Permian Basin of Texas and New Mexico. This would make Exxon the top oil producer in the region, surpassing OPEC nations with a daily output of approximately 1.2 million barrels. Moreover, this move would extend Exxon’s repository of premium drilling locations in the Permian Basin for decades, ensuring a stable supply of low-cost, low-risk crude well beyond 2050 to fuel its extensive refinery network on the Gulf Coast.
Market reactions to this news have been swift and dramatic. Exxon Mobil Corporation stock witnessed a 2.41% decline in pre-market trading to $106.36 per share in the pre-market trading. Meanwhile, Pioneer Natural Resources Company stock skyrocketed 10.49% to a trading price of $237.50 per share.
Earlier this week, Exxon had projected third-quarter operating profits within the range of $8.3 billion to $11.4 billion, with approximately half of these profits originating from its core oil and gas business.
This forecast meets analysts’ expectations and represents a considerable improvement over the group’s second-quarter earnings of $7.9 billion, boosted by the sharp increase in global oil prices, with WTI crude, the U.S. pricing benchmark, rising by more than 28.5% during the third quarter.