Exxon-Pioneer deal talks: What Wall St, policymakers have to say

(Reuters) – Exxon Mobil (NYSE:) is in advanced talks to acquire Pioneer Natural Resources (NYSE:) in a deal that could value the Permian Basin producer at about $60 billion, according to people familiar with the matter.

It would be Exxon’s biggest acquisition since its $81 billion deal for Mobil in 1998 and could deepen the oil major’s position in the country’s most lucrative oil patch.

Following are the comments on the likely deal.

MATTHEW BERNSTEIN, SENIOR SHALE ANALYST, RYSTAD ENERGY

“If Exxon Mobil is crowned the undisputed king of the Permian in the coming days, the shale sector will fundamentally become a more mature consolidated business.”

“A deal the size of Exxon Mobil’s potential acquisition of Pioneer, however, could usher in a new ‘Shale 4.0’ era … It would see high-spending supermajors, already in possession of large portions of the tight oil inventory, consolidate swathes of shale resources under their hold.”

MARK VIVIANO, MANAGING PARTNER AND PORTFOLIO MANAGER, KIMMERIDGE ENERGY ENGAGEMENT PARTNERS

“Exxon is flexing its muscle and clearly wants to be the 800-pound gorilla in the Permian.”

“Pioneer has been positioning for this day for the past decade ever since the Permian went horizontal. Scott Sheffield (Pioneer’s CEO) took back control of the company to make sure he had a hand in how the last chapter was written and this was always the ending.”

BILL SMEAD, CHIEF INVESTMENT OFFICER OF SMEAD CAPITAL MANAGEMENT

“I can’t imagine any deal is going to go for less than $65 billion, considering Pioneer is currently trading around $50 billion . . . This is the beginning of a massive consolidation in the industry.”

PETER MCNALLY, GLOBAL SECTOR LEAD FOR INDUSTRIALS MATERIALS AND ENERGY AT THIRD BRIDGE

“From the Exxon Mobil perspective, U.S. production volumes have actually been negative for the past four quarters – a stretch not seen since 2018 . . . it may prove to be more efficient to buy the production growth through an acquisition than to build it organically by adding more rigs and crews.”

BIRAJ BORKHATARIA, ANALYST, RBC CAPITAL MARKETS

“Would not expect XOM to pay a substantial premium for the assets given the limited number of alternative buyers out there for something of this scale. Following years of under-investment in the sector, we see the potential for large-scale M&A in the market as companies look to re-fill hoppers amid evolving views on the longevity of oil & gas.”

J.P.MORGAN ANALYSTS

“(PXD) Chairman and CEO Scott Sheffield, who founded the company in the 1997, is set to retire at year-end, and this (deal) would be a fitting way to conclude his tenure in what appears to be a shareholder friendly manner.”

SENATOR SHELDON WHITEHOUSE, DEMOCRAT FROM RHODE ISLAND

“Exxon has a big pile of cash that it made by gouging consumers, using a corrupt international cartel; and now it’s looking to use that money to double down on polluting the planet, pushing even more costs and dangers on consumers.”

BEN COOK, PORTFOLIO MANAGER, HENNESSY ENERGY TRANSITION FUND

“Given the concentration of acreage ownership in what is the United States’ largest oil-prone shale play, it raises some concerns. I mean there’s no question the position of that magnitude or size would give them considerable leverage in negotiating or contracts with the service providers.”

NEAL DINGMANN, ANALYST, TRUIST SECURITIES

“We would not be surprised to see further consolidation in the upstream space given the limited inventory and relatively inexpensive price of most E&Ps as judged by the latest suggested premium.”