Pioneer acquires Parsley Energy for $7.6 billion

Pioneer Natural Resources has agreed to buy fellow Texas oil company Parsley Energy for a mind-blowing $7.6 billion (€6.4 billion).

The deal sees a stock transaction equalling roughly $4.5 billion (€3.79 billion), with the Texas oil giants also taking on all of Pioneer's debt, leading to the total listed previously.

The merger will make them the largest independent oil companies in the Permian basin - the world's most prolific oilfield, stretching across Texas and New Mexico -  with some 930,000 net acres of land and a throughput of 328,000 barrels per day.

Based on 2019 levels, the deal increases Pioneer's proved reserves by 65%.

Scott Sheffield, CEO of Pioneer, said: “This transaction creates an unmatched independent energy company by combining two complementary and premier Permian assets, further strengthening Pioneer’s leadership position within the upstream energy sector."

Parsley Energy was founded by Sheffields son, Bryan, back in 2008.

The merger is expected to save the Irving-based £325 million (€274 million) annually through various operational efficiencies and cost-cutting methods and general and administrative interest expenses.

The total worth of these measures is reported to be a net total of $2 billion (€1.68 billion) over a ten-year period. 

This marks the fourth major oil industry transaction since the price of oil tanked earlier this year owing to a lack of demand due to the coronavirus pandemic.

The transaction has been approved by the boards of both companies and is expected to close in Q1 2021 subject to closing agreements, shareholder approvals and regulations.

Parsley shareholders are expected to get 0.1252 shares of Pioneer common stock for each share of Parsley common stock owned. Parsley is expected to dish out around 52 million shares in the transaction.

Matt Gallagher, Parsley's chief executive, who previously worked for Pioneer, said: “With neighbouring acreage positions located entirely in the low-cost, high-margin Permian Basin, the industrial logic of this transaction is sound."

Gallagher is expected to join the Pioneer board of directors alongside AR Alameddine, Parsley’s lead director, once the deal is complete, raising the total board members to 13.

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