Pioneer Natural Resources, one of the largest independent oil operators in the United States, to acquire rival Texas producer DoublePoint Energy in a $ 6.4 billion cash and stock transaction, as the consolidation of the country’s battered shale slab continues.
Pioneer said on Friday the acquisition would give it an “unmatched” scale in the Permian Basin of Texas, the world’s most prolific oil-producing region.
DoublePoint, backed by private equity, which hosted Donald Trump during a presidential election visit to texas Last July, one of the Permian producers increased production thanks to last year’s price collapse, which briefly left US oil prices trading below zero.
Pioneer said that despite its rapidly expanding Permian footprint, it would stick to its own plan for modest production growth.
“Pioneer will integrate these assets into our investment model, migrating assets from significant production growth to a free cash flow model, moderating the growth of the US shale industry and generating significant value for our shareholders.” Said Scott Sheffield, CEO of Pioneer.
In January, Pioneer completed a deal for Parsley Energy, another major Permian producer, in a $ 7.6 billion acquisition that led to the Sheffield-based company merging with a company founded by his son, Bryan Sheffield.
Last year’s collapse in oil prices sparked numerous bankruptcies in the shale zone, a sharp drop in production and a wave of mergers and acquisitions. More than $ 50 billion in deals were made in the second half of 2020, according to data provider Enverus.
Seeking to win back investors who have fled the sector in recent years, shale miners have promised that an era of drilling fueled by debt and negative cash flow is over, replaced by a focus on slow production growth and high yields.
DoublePoint, backed by private equity groups Quantum Energy Partners and Apollo Global Management, was among the Permians not listed producers were able to reverse this trend last year and increase their production.
Pioneer, which produced 370,000 barrels of oil and gas per day in 2020, said DoublePoint’s production would hit 100,000 bpd by the end of June.
Pioneer’s offering included 27 million shares, $ 1 billion in cash and the assumption of $ 900 million in debt. The cost savings resulting from the operation would amount to $ 1 billion over 10 years.
Pioneer said the deal would allow an increase in the variable dividend paid to shareholders from 2022.