Under the terms of the agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing. The implied total enterprise value of the transaction, including net debt, is about $64.5 billion. The per-share merger consideration represents an approximate 18% premium to Pioneer’s closing price on Oct. 5.

The merger would combine Pioneer’s more than 850,000 net acres in the US Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins. Together, the companies would have an estimated 16 billion barrels of oil equivalent resource in the Permian. At close, ExxonMobil’s Permian production volume would more than double to 1.3 million barrels of oil equivalent per day (MOEBD), based on 2023 volumes, and is expected to increase to approximately 2 MOEBD in 2027.

“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge. The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis,” said ExxonMobil chairman and CEO Darren Woods. “Their tier-one acreage is highly contiguous, allowing for greater opportunities to deploy our technologies, delivering operating and capital efficiency as well as significantly increasing production."

Pioneer’s CEO Scott Sheffield commented: “The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin. As part of a global enterprise, Pioneer, our shareholders and our employees will be better positioned for long-term success through a size and scale that spans the globe and offers diversity through product and exposure to the full energy value chain.”

The mergers is expected to generate double-digit returns by recovering more resource, more efficiently and with a lower environmental impact.

The boards of directors of both companies have unanimously approved the transaction, which is subject to customary closing conditions and expected to close in the first half of 2024.

According to ExxonMobil, the combination transforms its upstream portfolio by increasing lower-cost-of-supply production, as well as short-cycle capital flexibility.