Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
The deal could just as easily fall apart, according to various media reports.
If consummated, the acquisition would be Exxon's biggest since its $81 billion deal for Mobil in 1998 and would expand its footprint in one of the most lucrative regions of the U.S. oil patch.
Pioneer, which had a market value on Oct. 5 of $50 billion, is the third-largest oil producer in the Permian Basin after Chevron Corp. and ConocoPhillips. The Permian, which spans parts of Texas and New Mexico, is the U.S. energy industry's most coveted because of its relatively low cost to extract oil and gas.
If the negotiations conclude successfully, an agreement between Exxon and Pioneer could be reached in the coming days, the three sources said, asking not to be identified because the matter is confidential.
Spokespeople for Exxon and Pioneer declined to comment. The Wall Street Journal first reported on Oct. 5 that a deal between the two companies was approaching.
Exxon, which has a market value of $436 billion, is the largest U.S. oil producer with an average 3.8 MMboe/d from its global operations.
Last year the supermajor earned a record $55.7 billion thanks to high oil and gas prices and ended the year with $29.6 billion in cash.
Some of those profits have tapered off this year as energy prices, which surged after Russia's invasion of Ukraine, have fallen over concerns about a global economic slowdown weighing on fuel demand.
Acquiring Pioneer would give Exxon more established oil-producing land it can rely on to increase production when needed, rather than risk its cash on the development of unproven acreage.
"It makes complete sense," said Bill Smead, chief investment officer of Smead Capital Management, an investment firm which manages $5.2 billion in funds. "You replenish your reserves without poking holes in the ground."
Exxon produced about 620,000 boe/d in the Permian basin in the second quarter, a record for the company. Still, this was dwarfed by Pioneer's output in the basin, which averaged 711,000 boe/d in the same period.
The potential deal is set to attract political and regulatory scrutiny, after the White House accused Exxon in February of achieving bumper profits at the expense of consumers.
Other oil majors have also been turning to dealmaking because they find it risky to drill new acreage. Chevron Corp., for example, agreed in May to acquire shale producer PDC Energy Inc. in a stock-and-debt transaction worth $7.6 billion.
Pioneer itself has bulked up through dealmaking, including the acquisitions of U.S. shale rivals DoublePoint Energy for $6.4 billion in 2021 and Parsley Energy for $7.6 billion in 2020.
The Dallas-based company is led by industry veteran Scott Sheffield, who has said he will retire at the end of this year and be succeeded by his chief operating officer Richard Dealy.
2023-12-22 - The oil and gas rig count, an early indicator of future output, fell by three to 620 in the week to Dec. 21, the lowest since mid-November.
2023-12-15 - The oil and gas rig count, an early indicator of future output, fell by three to 623 in the week to Dec. 15.
2024-01-12 - The oil and gas rig count, an early indicator of future output, fell by two to 619 in the week to Jan. 12, the lowest since November.
2024-01-05 - The oil and gas rig count, an early indicator of future output, fell by one to 621 in the week to Jan. 5.
2024-01-03 - CNOOC’s South China Sea development is expected to reach peak production of 22,600 bbl/d in 2025.