Energy giant Exxon Mobil (NYSE:XOM) has confirmed the much-discussed acquisition of Pioneer Natural Resources (NYSE:PXD). Exxon will pay $253 per share to buy PXD in an all-stock deal, valuing the company at $59.5 billion. This represents a 6.6% premium to Pioneer’s closing price of $237.41 on Tuesday. Following the news, PXD stock rose 2.1% in Wednesday’s pre-market trading, while XOM stock is down 1.8% as of the last check.
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Both parties have agreed to a share exchange deal in which each PXD shareholder will receive 2.3234 shares of XOM stock. The deal is expected to be completed in the first half of 2024, subject to closing conditions.
Exxon CEO Darren Woods expects the deal to help reduce the company’s environmental footprint and accelerate Pioneer’s net-zero emissions plan from 2050 to 2035.
Exxon Plans to Become a Shale Leader Through PXD Deal
Reports from yesterday had hinted that the deal could be stock-focused. Exxon is betting on the premise that the demand for oil and gas will continue for decades despite global efforts to turn toward carbon-free consumption.
The transaction marks the biggest takeover of 2023 and Exxon’s largest deal since merging with Mobil Corp. in 1999.
The combination of Exxon and Pioneer will create America’s largest shale producer in the Permian Basin. The Permian Basin is considered one of the most oil-rich patches in the U.S. and globally. Pioneer’s fields have several yet-to-be-drilled sites that could become live and be immediately accretive to Exxon’s performance. A successful combination could also spur further M&A activity in the energy sector.
Is Exxon a Good Buy Right Now?
Wall Street remains cautiously optimistic about Exxon stock’s trajectory. Of the 14 Top Analysts who recently rated XOM stock, eight have a Buy rating, while six have a Hold view. Top Wall Street analysts are those awarded higher stars by the TipRanks Star Ranking System. This is based on an analyst’s success rate, average return per rating, and statistical significance (number of ratings).
Based on these analysts’ views, XOM has a Moderate Buy consensus rating on TipRanks. The average Exxon Mobil price target of $127.79 implies 15.7% upside potential from current levels. Year-to-date, ExxonMobil stock has gained 6.3%.
