China to double shale gas production levels

Pioneer Natural Resources to buy DoublePoint Energy in the U.S.

Apr 04, 2021
3 min read
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Pioneer Natural Resources Company announced that it has entered into a definitive purchase agreement to acquire the leasehold interests and related assets of DoublePoint Energy for $6.4 billion.

Scott D. Sheffield, Pioneer’s CEO stated: “DoublePoint has amassed an impressive, high quality footprint in the Midland Basin, comprised of tier one acreage adjacent to Pioneer’s leading position. We are pleased with their decision to become long-term partners with Pioneer in a transaction that will complement our unmatched position in the core of the Permian Basin. Pioneer will incorporate these assets into our investment model, migrating the assets from significant production growth to a free cash flow model, moderating growth for the U.S. shale industry and generating significant value for our shareholders.”

The acquisition is expected to result in annual cost savings of approximately $175 million through operational efficiencies and reductions in general and administrative (G&A) and interest expenses. The expected present value of these cost savings totals approximately $1 billion over a 10-year period.

Geoffrey Strong, Senior Partner and Co-Head of Infrastructure and Natural Resources at Apollo, commented: “The combination of Pioneer and DoublePoint is compelling from both a financial and operational standpoint and a natural fit for DoublePoint. This acquisition continues the trend of consolidation in the prolific Permian Basin, combining two complementary footprints in a transaction with both top- and bottom-line synergies.” Dheeraj Verma, President of Quantum Energy Partners added, “we are firm believers in Pioneer’s strategy of free cash flow generation, which enables a competitive base and strong variable dividend.”

Cody Campbell and John Sellers, Co-CEO’s of DoublePoint Energy added: “We are proud and appreciative of the work that our team has done to build a company and an asset base that is unparalleled in quality and truly cannot be replicated. We are honored to have the opportunity to combine our business with Pioneer, who we have long admired and regard as the premiere operator in the Midland Basin. The fit and the synergies are clear, and we look forward to working with Pioneer to continue creating value.”

Pioneer will issue approximately 27.2 million shares of common stock in the transaction with an additional $1 billion of cash. After closing, existing Pioneer shareholders will own approximately 89 percent of the combined company and existing DoublePoint owners will own approximately 11 percent of the combined company. Pioneer plans to finance the cash portion of the purchase price through a combination of cash on-hand and existing borrowing capacity under its revolving credit facility.

The transaction has been unanimously approved Pioneer’s Board of Directors and is expected to close in the second quarter of 2021, subject to customary closing conditions and regulatory approvals.