Page 4 - NorthAmOil Week 14 2021

NorthAmOil COMMENTARY NorthAmOil

Pioneer strikes another

Permian mega-deal

Shale producer Pioneer Natural Resources is consolidating

its leading position in the Permian Basin through another

major acquisition

PERMIAN BASIN PIONEER Natural Resources is once against in Pioneer’s CEO, Scott Sheffield, saying his com-
the news because of a major acquisition, having pany would be moving DoublePoint’s assets
WHAT: announced last week that it had struck a deal to from “significant” production growth to a free
Pioneer has struck a buy DoublePoint Energy for $6.4bn in cash and cash flow (FCF) model.
deal to buy DoublePoint stock. DoublePoint, which is backed by private
Energy for $6.4bn in cash The company’s offer consists of 27.2mn shares equity groups Quantum Energy Partners and
and stock. worth $4.5bn, $1bn in cash and the assumption Apollo Global Management, is one of the Per-
of $900mn worth of debt. After the deal closes, mian producers that raised its production
WHY: in the second quarter of this year, current Pio- through last year’s price crash. This growth
The company is neer shareholders will own roughly 89% of the came even as many other drillers in the basin
pursuing a strategy of combined company and existing DoublePoint cut back significantly on spending and drilling
consolidating its Permian shareholders will own the remaining 11%. activity, especially in the first half of the year.
Basin position while The acquisition comes less than three months The DoublePoint assets consist of 97,000 net
favouring restraint in after the company closed its $7.6bn takeover of acres (393 square km) in the Midland sub-basin
drilling and production. Parsley Energy. It also comes as Pioneer – along- that directly offset and overlap with Pioneer’s
side other major shale producers – continues to existing footprint in the Permian. The addition
WHAT NEXT: call for restraint in terms of drilling and produc- of this acreage will bring Pioneer’s holdings to
Pioneer’s CEO has tion, with oil prices remaining fragile. However, over 1mn net acres (4,047 square km). Pioneer
said his company will the company is demonstrating that it sees no expects output from the acquired assets to rise
move DoublePoint’s need to act with restraint as far as mergers and above 100,000 barrels of oil equivalent per day
assets from significant acquisitions (M&As) go. (boepd) by late in the second quarter of 2021,
production growth to a with the deal closing sometime this quarter as
free cash flow model. Permian giant well. It is subsequently planning to reduce the
In an April 1 statement, Pioneer described the number of rigs on the DoublePoint acreage
DoublePoint deal as a bolt-on acquisition that from seven currently to five by the end of this
would give it “unmatched” scale in the prolific year.
Permian Basin, where it is already a dominant “This deal is the largest acquisition of a private
player. However, the producer reiterated its US E&P since 2011 and one of the largest private
commitment to modest output growth, with E&P acquisitions of the last 20 years,” Enverus’

P4 www. NEWSBASE .com Week 14 08•April•2021