Exxon Mobil Offers $59.5 Billion for Pioneer Natural Resources in Landmark Deal
HOUSTON, Oct 16 (Reuters) – In a historic deal, oil giant Exxon Mobil has offered $59.5 billion to acquire Pioneer Natural Resources, making it the biggest acquisition in the oil and gas industry in recent years. The move comes as Exxon seeks to strengthen its presence in the lucrative U.S. shale basin.
Four years ago, Pioneer CEO Scott Sheffield recognized the oil majors’ growing interest in the U.S. shale basin and set out to position his company as the most desirable catch among shale independents. He concentrated the business, streamlined operations, and made Pioneer the leanest and most profitable player in the industry.
Sheffield’s vision and strategic moves paid off on October 11 when Exxon Mobil made the $59.5 billion offer for Pioneer Natural Resources, more than doubling its value since 2019. This deal solidifies Pioneer’s position as a top player in the shale industry.
“Pioneer sat in a position of being a predator and prey,” said shale investor Dan Pickering. “He was thinking multiple steps ahead.”
Sheffield’s passion for the oil industry can be traced back to his high school years in Iran, where his father worked for Atlantic Richfield Co. He played as a quarterback on his high school’s American football team in Tehran, developing a fierce desire to win. This competitive spirit has driven him throughout his career.
Under Sheffield’s leadership, Pioneer Natural Resources has grown from a small family business in West Texas to one of the largest players in the industry. He retired in 2019 but returned as CEO after the company faced financial difficulties.
Since his return, Sheffield directed the company’s focus solely on Permian oil. He sold off non-core assets, generating cash to acquire rival companies. He also adopted a philosophy that prioritized shareholder returns over rapid production gains, a shift from the industry’s previous approach.
Sheffield’s ability to read industry trends and foresee the major role of technology in reshaping oil production has been instrumental in Pioneer’s success. He also anticipated that major oil companies would eventually aim to control the Permian basin.
After sitting down with Exxon CEO Darren Woods, Sheffield and Woods agreed to the terms of the sale within two weeks of negotiations. The acquisition positions Exxon Mobil as a dominant force in the Permian basin and strengthens its position in the shale industry.
While Sheffield’s approach of restraining production to boost shareholder returns has faced criticism from some who believe it diminishes the U.S. role in oil markets, his strategic moves have clearly paid off in the form of this landmark deal.
As part of the agreement, Sheffield will receive a $29 million severance package, approximately $100 million in Exxon shares, and a seat on Exxon’s board.
The sale of Pioneer Natural Resources to Exxon Mobil is expected to conclude next year, pending regulatory approvals. As Sheffield embarks on this new chapter, he may need to rein in his outspokenness to align with Exxon’s corporate culture, according to his son Bryan Sheffield. Nevertheless, Scott Sheffield’s reputation as a forward-thinking leader and his extensive industry experience make him a valuable addition to Exxon’s board.
Reporting by Arathy Somasekhar in Houston; editing by Gary McWilliams and Marguerita Choy