In the week’s second major transaction, Dallas-based Pioneer Natural Resources and Austin-based pure play Permian operator Parsley Energy said Tuesday they agreed to an all-stock transaction for Pioneer to acquire Parsley for $4.5 billion. Including Parsley’s debt assumed by Pioneer, total value of the deal is $7.6 billion. Scott D. Sheffield, Pioneer president and CEO, said, “This transaction creates an unmatched independent energy company by combining two complementary and premier Permian assets….” Matt Gallagher, Parsley president and CEO, added, “The combination of Parsley and Pioneer creates an organization set to thrive as we forge a strong new link at the low end of the global cost curve. With neighboring acreage positions located entirely in the low-cost, high-margin Permian Basin, the industrial logic of this transaction is sound.”
Their announcement said the combine will be “the leading Permian independent exploration and production company with a premium asset base of 930,000 net acres with no federal acreage and a production base of 328,000 b/d of oil and 558,000 boed as of 2020Q2.” Expected annual cost saving is $325 million. Transaction is expected to close in 2021Q1.
Bloomberg said the deal “underscores the view that oil companies must be big to survive in a new, pandemic-maligned world that’s oversupplied with crude.” Sheffield told analysts, “It seems like the best companies have been picked off.” (Sheffield’s son Bryan is Parsley’s founder and chairman. Pioneer CFO Richard Dealy told analysts and investors the two Sheffields intentionally were kept out of takeover talks led by the independent directors of both companies.)