Thread regarding ExxonMobil Corp. layoffs

Have to see it to believe it. But know the PDS recyclers are knashing their teeth.

I doubt this. I don't believe any acquisition at the moment, unless it has another stellar year approaching 2022 levels. Then just maybe an acquisition near early 2024. My thought was they'd form the treasure chest again after the dramatic slump that covid caused. If anyone, Devon looks better and cheaper than Pioneer.

A good dose of skepticism is definitely warranted in any M&A deal. But sometimes where there is smoke there is fire. It is refreshing to see a major oil and gas company sticking to its core values of investing in the oil and gas industry. Unlike the European companies such as BP and Shell, that are frantically trying to transition into "green" energy businesses.

This keeps coming up and it’s basically a bogus story with the current administration. Wall Street keeps putting this out because either someone is long a stock looking to exit or they are pushing to get some M&A fees while the IPO market and commercial real estate is slow. The company has its issues, but buying a major acquisition at the top of a cycle we know better….unless someone needs this for a PDS. Company historically would wait to acquire people at bottom of cycle, when our equity would be stronger relative to theirs.

ExxonMobil And Pioneer: A Match Made In Las Colinas
David Blackmon Senior Contributor
David Blackmon is a Texas-based public policy analyst/consultant.

https://www.forbes.com/sites/davidblackmon/2023/04/08/exxonmobil-and-pioneer-a-match-made-in-las-colinas/?sh=2a66720b24bb

Rumors of a potential buyout of big Permian Basin producer Pioneer Natural Resources by ExxonMobil have circulated periodically for years now, long before Pioneer made the decision to become a so-called “pure play” company focused solely on the most prolific oil and gas region in the U.S. Some of that might have to do with the fact that the headquarters operations for both companies have long been housed right across the highway from one another in the Dallas suburb of Las Colinas, a compact enclave in which executives from the companies no doubt regularly stumble over one another at Chick-Fil-A and Fuzzy’s Tacos.

A Potential Permian Powerhouse

It is, after all, always best to discuss big potential ideas and major transactions face to face, and few bigger potential transactions exist in the oil patch today than one which would result from a combination of these two companies. Thus, it is not really surprising that the Wall Street Journal published a story late Friday detailing rumors of merger talks being underway.

Pioneer is the largest leaseholder in the Midland Basin portion of the greater Permian Region, while ExxonMobil has long held sway as the biggest fully-integrated U.S. domestic oil and gas company. Upon becoming a Permian Basin pure play when it divested the last of its non-core assets in mid-2019, it appeared to many observers that Pioneer’s management could be setting itself up as a prime takeover target, and that the long-standing rumors of an eventual merger with ExxonMobil could be about to happen. But, more than three years down the road, Pioneer still stands as a figurative oil and gas king pin of Midland, Texas.

ExxonMobil management has long made no secret of harboring aggressive growth plans in the Permian, and recently unveiled a beefed-up capital budget targeting the region for 2023 and beyond in the wake of recording record profits in 2022. A combination of these two oil giants would sport a Permian-centric asset base and slate of potential drilling locations that would dwarf any other player in the basin. The respective leasehold acreage held by the companies has a high degree of connectivity, always a prize feature desired by any acquirer that is looking to maximize efficiency gains and economies of scale.

Not ExxonMobil’s First Time At The Dance

A merger with Pioneer would not be the first time ExxonMobil has targeted the Permian in such a deal. It gained its first major foothold in the early-stage Permian shale development in 2010 with a $30 billion deal to acquire Fort Worth-based XTO Energy, one of the big early players in Midland.

ExxonMobil management at the time was careful to couch that transaction as a merger in which it would retain the XTO brand as a separate, semi-independent business unit. It also kept most of the XTO team in place, in a strategy designed to enable it to retain the nimble decision-making ability needed to succeed in the early stages of the big shale play’s growth. That’s helped Exxon develop it’s stronghold in the western portion of the Permian — 275,000 acres acquired from Fort Worth’s Bass family in 2017 for $6 billion.

There would be a lot of overlap, and dare we say “redundancy” among the combined ranks of Exxon and Pioneer’s Permian-focused petroleum geologists and project managers — especially in Las Colinas! A deal would also spin up more M&A action (ChevronCVX -1.3%+Oxy or Conoco+EOG?) in the now mature Permian neighborhood, where maximizing profits has become a game of driving efficiencies, improving processes, technology deployment — and maximizing cash flow and returns to investors.

On those latter points, the Wall Street Journal story notes Pioneer generated $8.4 billion in free cash flow during 2022 and paid out almost $8 billion in dividends. Those are big numbers that would be attractive additions to any company’s financials. But for how many years will Pioneer still have enough good drilling inventory to keep that up?

Bottom Line

It must be pointed out here that the Journal’s story, while meticulously reported, is speculative in nature, based on input from an apparent variety of unnamed sources. The writers are careful to point out that talks between the companies have not moved into a formal discussion process.

It is certainly fair to point out that conditions in the Permian Basin, and in U.S. shale in general, have evolved immensely since rumors of a possible merger of these two companies first percolated up a decade ago. Conditions that prevailed during the early, leasing and drilling bo-m phase of development gave a decided advantage to nimble independent producers and their ability to make quick decisions on the fly. But prevailing conditions today, with their focus more on process, technology and economies of scale, seem more ripe for exploitation by a big integrated company like ExxonMobil.

These and other conditions could mean this long-rumored match whose seeds were planted in Las Colinas might finally come about. Stay tuned.

Scott Sheffield must be laughing all the way to the bank.

Our execs are unbelievable.

Please buy us please! It’s a toxic h3ll hole here.

A shame how every part of our business has become reactionary in the last decade or so, there used to be a consistent long term strategy

It would be hilarious since EM basically gave (farmed out) PDX its entire acreage position in the Midland basin. And to buy it all back during a commodity up cycle! Freaking bunch of id--ts. Sure glad those bozos get to rank us next month. 🤡

Zigging while CVX was zagging 🙄🤣
#winning for sure

Wish they were buying Devon Energy!

Great! We are buying back our Permian acreage we sold to them in early 2000s! Next we will buy Hess to get all of Guyana back! #winning!

Chevron acquired Nobles when oil was $40, in Oct 2020, during Covid.

We are apparently acquiring Pioneer when oil is $80.

Awesome strategy!

Agree with the last post. Uncon in your backyard is King.

The acquisition makes perfect sense, since it will increase domestic resources. This will diversify away from international resources that now have more risk, due to geopolitical uncertainties and the forces of de-globalization. It also appears that the current political administration has figured out that being anti-oil has its limits and is starting to soften its stance.

Pioneers latest earnings call highlighted some production issues on their acreage and have to redirect rigs. This acquisition would be a band aid.