Last week, Pioneer Natural Resources (PXD) stock rose 8.5% on reports that the shale oil producer discussed a possible acquisition with Exxon Mobil (XOM). What’s in it for Exxon Mobil?
After Chevron (CVX) and ConocoPhillips (COP) , Pioneer is the third-largest oil producer in the Permian basin, the oil-rich region stretching across Texas and New Mexico.The Pioneer acquisition would be the largest for the oil and gas giant since the merger of Exxon and Mobil in 1999. It would help Exxon Mobil boost its global inventory and build a dominant position in the Permian Basin oil patch.
Thanks to sky-high oil and gas prices, Exxon Mobil is flush with cash after posting a record profit of $55.7 billion in 2022. Pioneer's market cap is about $53 billion, which is just one-ninth of Exxon Mobil’s market cap.Barring a deep recession, oil prices should move higher. The recent OPEC+ production cut — 1% of global production — increased prices, causing Goldman Sachs to raise their oil price forecast to $97 per barrel over the next 12 months. This suggests the acquisition should immediately boost Exxon’s earnings.Some say the green transition doesn’t bode well for big oil, but energy expert David Messler remains bullish. “There’s no energy transition. Only “energy addition.” Wind, solar, biofuels, and Hydrogen will share the global energy load with ‘on-demand’ petroleum sources as long as there’s an industrial economy and need for personal transportation.” In other words, should Exxon Mobil’s acquisition of Pioneer happens, it could be very beneifical to the company for years to come.
For trading ideas, see “Top oil stocks for an energy-dependent world”.
On the date of publication, Andy Mukolo did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
