- Pioneer Natural Resources Co (NYSE: PXD) announced today that it entered into a definitive agreement under which Pioneer is going to acquire all of the outstanding shares of Parsley Energy, Inc. (NYSE:PE) in an all-stock transaction
Pioneer Natural Resources Co (NYSE: PXD) announced today that it entered into a definitive agreement under which Pioneer is going to acquire all of the outstanding shares of Parsley Energy, Inc. (NYSE:PE) in an all-stock transaction valued at approximately $4.5 billion as of October 19, 2020. And under the terms of the agreement, Parsley shareholders will receive a fixed exchange ratio of 0.1252 shares of Pioneer common stock for each share of Parsley common stock owned.
The total value for the deal — inclusive of Parsley debt assumed by Pioneer — is approximately $7.6 billion.
This all-stock deal will be creating the largest Permian Basin-only shale producer and it will add annual cost savings of $325 million. Pioneer shareholders are going to own about 76% of the combined company.
It’s worth mentioning that Pioneer CEO Scott Sheffield is the father of Bryan Sheffield. And Bryan Sheffield is the founder and current executive chairman of Parsley. Some investors are concerned about potential conflicts of interest, but many others believe that the deal should be genuine as long as it is in everyone’s interests.
This deal is expected to close in Q1 2021.
KEY QUOTES:
“This transaction creates an unmatched independent energy company by combining two complementary and premier Permian assets, further strengthening Pioneer’s leadership position within the upstream energy sector. Parsley’s high-quality portfolio in both the Midland and Delaware Basins, when added to Pioneer’s peer-leading asset base, will transform the investing landscape by creating a company of unique scale and quality that results in tangible and durable value for investors.”
“This combination is expected to drive annual synergies of $325 million and to be accretive to cash flow per share, free cash flow per share, earnings per share and corporate returns beginning in the first year, creating an even more compelling investment proposition. Further, Pioneer’s emphasis on environmental stewardship aligns with Parsley’s culture of sustainable operations. The addition of Parsley’s high-quality assets enhances Pioneer’s investment framework by improving our free cash flow profile and strengthening our ability to return capital to shareholders. We look forward to integrating Parsley into Pioneer and continuing our history of strong execution.”
— Scott D. Sheffield, Pioneer’s President and CEO
“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. Furthermore, the Pioneer team shares our belief that a clear returns-focused mindset is the best tool to compete for capital within the broader market. Sustainable free cash flow and growing return of capital are now investment prerequisites for the energy sector and this combination strengthens those paths for our shareholders. Finally, I would like to personally thank every employee of Parsley Energy for their role in the evolution of this company – from operating a few dozen vertical wells in 2008 to a global leadership position in E&P operations today.”
— Matt Gallagher, Parsley’s President and CEO
“The inevitable consolidation in the Permian marches on and I couldn’t think of a better combination of assets than Pioneer and Parsley. This combination will provide Parsley shareholders new structural advantages including a lower cost of capital, a fortified balance sheet, economies of scale, and enhanced ESG capabilities while amplifying all of the relative strengths of our standalone model. We look forward to partnering with the Pioneer team as they cement their position as the premier independent E&P.”
— S. Wil VanLoh, Jr., a Parsley director and the Founder and Chief Executive Officer of Quantum Energy Partners, Parsley’s largest shareholder
