Pioneer Natural Resources In Talks To Buy Parsley Energy- Report

Pioneer Natural Resources (PXD) is currently in discussions to buy Parsley Energy, reports the Wall Street Journal, which cites people familiar with the matter.

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According to the Wall Street Journal sources, the two shale producers are considering an all-stock deal that could be completed by the end of the month if the talks don’t fall apart.

Both oil-and-gas companies have operations in the Permian Basin of Texas and New Mexico- and the deal would be the latest tie-up for a rapidly consolidating industry which has been hit by a drastic fall in oil prices.

For instance, earlier this month, ConocoPhillips announced a massive $9.7 billion acquisition of shale producer Concho Resources in an all-stock deal.

Should Pioneer and Parsley (PE) join forces, it would create a company capable of producing about $10 billion in combined revenues and production of more than 550,000 barrels of oil equivalent a day, says The Financial Times.

Shares in Pioneer dropped 3.6% in Monday’s trading, while Parsley dropped 2%. Overall, on a year-to-date basis Pioneer has plunged over 42% but the stock scores a bullish Strong Buy Street consensus. That’s with an average analyst price target of $122 (40% upside potential).

RBC Capital analyst Scott Hanold recently published a buy rating on Pioneer Natural Resources with a $120 price target (38% upside potential).

“A leading operator in the Permian with one of the largest, most contiguous positions in the Midland Basin provides PXD with a deep inventory of high-tier assets. We think this scale provides a strong advantage over its peers” the analyst comments.

He believes that the company’s production growth profile, balance sheet, and free cash flow generation are best- in-class, and that ultimately this should enable Pioneer to outperform peers. (See PXD stock analysis on TipRanks)