(Reuters) - Exxon Mobil said on Wednesday it would buy U.S. rival Pioneer Natural Resources in an all-stock deal valued at $59.5 billion that puts it atop the largest U.S. oilfield and secures a decade of low-cost production.
Exxon has offered $253 per share for Pioneer. Pioneer shares, which closed at $237.41 on Tuesday, were up 1.1% at $239.98 in premarket trading. Exxon shares were flat.
A deal will be Exxon's biggest since its $81 billion purchase of Mobil Oil in 1998 and the largest acquisition this year.
The deal value implies a 6.57% premium as per Pioneer's last close, according to Reuters' calculations.
The deal will leave four of the largest U.S. oil companies in control of much of the Permian Basin shale field and its extensive oilfield infrastructure.
Pioneer is the Permian's largest operator accounting for 9% of gross production, while Exxon occupies the No. 5 spot at 6%, according to RBC Capital Markets analysts.
Antitrust experts told Reuters last week that Exxon and Pioneer stood a good chance of completing their deal, even though they would face heavy scrutiny. This is because they could argue that together they will account for a small fraction of a vast global market for oil and gas.
The deal comes after Exxon has pulled itself from deep losses and huge debts in the last two years by slashing costs, selling dozens of assets and benefiting from high energy prices spurred by Russia's invasion of Ukraine.
Chief Executive Darren Woods has rebuffed investor and political pressure to shift strategies and embrace renewable energy as European oil majors have done. He faced heavy criticism for sticking to a heavy oil-dependent strategy as climate concerns became more pressing.
The decision paid off when the company last year earned a record $56 billion profit, two years after losses ballooned to $22 billion during the COVID-19 pandemic.
Exxon socked away some of the huge profits from the oil-price run up, putting aside some $30 billion in cash in anticipation of deals, according to analysts.
Pioneer has been one of the most successful oil companies to emerge from the shale revolution, which turned the U.S. from a major oil importer into the world's largest producer in little more than a decade.
Permian Basin is highly valued by the U.S. energy industry because of its relatively low cost to extract oil and gas, with rock-bottom production costs averaging about $10.50 per barrel.
Under CEO Scott Sheffield, Pioneer grew through rapid-fire purchases, including multi-billion dollar deals in 2021 for DoublePoint Energy and Parsley Energy.
Exxon's purchase would outrank oil major Shell's (SHEL.L) $53 billion acquisition of BG Group in 2016, which put it atop the global liquefied natural gas market.
In July, Exxon agreed to a $4.9 billion all-stock deal for Denbury, a small U.S. oil firm with a network of carbon dioxide pipelines and underground storage. That acquisition was intended to bolster Exxon's nascent low-carbon business.
The largest U.S. oil producer originally made an all-cash bid for Denbury, and at the last minute switched to all stock, reflecting both the target's move up in market value during the talks and investors wanting to take part in any upside in Exxon's stock.
The oil giant's share price has recovered strongly since its early 2020 tumble to about $30 as oil and gas prices collapsed. Exxon shares recently hit an all-time high of $120 per share.
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