Exxon Mobil acquires biggest stakeholder in highest producing oil field in US

Exxon Mobil Corporation will acquire Pioneer Natural Resources, according to an agreement the companies reached Wednesday.

The merger is valued at $59.5 billion, according to the announcement.

The combination of the two companies will give Exxon a major position in West Texas’ Permian Basin, the highest producing oil field in the U.S. 

ExxonMobil Chairman and CEO Darren Wood said contiguous acreage owned by each companies will allow Exxon to operate efficiently and increase production. 

“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,” Woods said. 

The merger will bring together 16 billion barrels of oil resources in the Permian.

The acquisition suggests the oil giant is betting that the U.S. will need oil and gas for many decades to come. 

Pioneer CEO Scott Sheffield said in April the company’s operations has become much more effective at how to get more oil and gas out of its shale acres. 

According to energy analyst David Blackmon, the merger is Exxon’s biggest acquisition since its $81 billion merger with Mobil Oil Company in 1998. 

Blackmon said the deal signifies a continuance of the “bigger is better” strategy in America’s shale plays. Such growth through mergers and acquisitions provides opportunities to optimize operations and gain efficiencies through economies of scale. 

Shale oil and gas operations require large amounts of water, and Blackmon said the merger would allow Exxon to optimize its water usage, recycling and transport operations, and reduce the miles its trucks drive for specific tasks, as well as other efficiencies.