Pioneer Natural Jumps on Report of Buyout Talks with Exxon

(Reuters) — Pioneer Natural Resources Co.'s shares rose as much as 8.5% on Monday following a report that Exxon Mobil Corp. held preliminary talks with the U.S. shale oil producer about a possible acquisition.

Shares of Pioneer were up 6.5% at $221.74, while Exxon Mobil inched up 0.2% to $115.25.

The Wall Street Journal had reported the news on Friday, citing people familiar with the matter.

Pioneer is the third-largest oil producer after Chevron Corp. and ConocoPhillips in the Permian basin, the biggest in the United States. It currently has a market capitalization of around $49 billion, according to Refinitiv data.

Analysts believe Pioneer and other exploration and production companies could be acquired in the coming quarters given oil giants such as Exxon are looking to boost inventory.

RELATED: WSJ: Exxon Eyes Potential Purchase of Shale Driller Pioneer

"Would not be surprised to see Exxon step up for PXD's scale and inventory depth in the Midland Basin, but the price tag will ultimately be based on the oil prices underwritten by Exxon. In the current environment, we think ~$250/bbl, or a 20% premium," said Gabriele Sorbara, managing director of Equity Research at Siebert Williams Shank & Co.

Exxon is coming off a year of record profits on sky-high oil and gas prices that helped it end 2022 with $29.6 billion in cash and equivalents.

"A substantial premium would be required as Pioneer has time on their side, citing a multi-decade drilling inventory in the Midland basin that bests almost all independents," said TD Cowen analyst Jason Gabelman

Truist, another brokerage, said the Permian basin will be the hottest target for deal activity as many existing companies want to beef up their positions in the oil-rich region that stretches across Texas and New Mexico.

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