Oil & Gas Journal -- Pioneer to acquire Parsley in $4.5 billion deal .....................
Oct 20th, 2020
Pioneer to acquire Parsley in $4.5 billion deal
Pioneer Natural Resources Co. agreed to acquire Parsley Energy Inc. in an all-stock transaction valued at $4.5 billion as of Oct. 19, 2020. The total value, inclusive of Parsley debt assumed by Pioneer, is $7.6 billion.
By OGJ editors
Pioneer Natural Resources Co. agreed to acquire Parsley Energy Inc. in an all-stock transaction valued at $4.5 billion as of Oct. 19, 2020. The total value, inclusive of Parsley debt assumed by Pioneer, is $7.6 billion.
The combined Permian exploration and production company will hold some 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 the second quarter of 2020. Based on year-end 2019 proved reserves, the deal increases Pioneer’s proved reserves by 65%.
The combine is expected to result in annual cost savings of $325 million through operational efficiencies and reductions in general and administrative and interest expenses. The expected present value of these cost savings exceeds $2 billion over a 10-year period. Operational savings are expected to be driven by the utilization of shared facilities, overlapping operations, scale efficiencies, and benefits provided by Pioneer’s water infrastructure. Further synergies are expected from adjacent acreage footprints and the ability to drill extended laterals where lease configurations of the separate companies prevented long-lateral horizontal wells.
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. Pioneer will issue about 52 million shares of common stock in the transaction. After closing, existing Pioneer shareholders will own about 76% of the combined company and existing Parsley shareholders will own about 24%.
The transaction has been approved by the boards of directors of both companies and is expected to close in first-quarter 2021, subject to customary closing conditions, regulatory approvals, and shareholder approvals. Parsley’s largest investor, Quantum Energy Partners, which owns 17% of Parsley’s outstanding shares, has executed a Voting and Support Agreement in connection with the transaction.
Upon closing, Pioneer’s board of directors will be expanded to 13 to include Matt Gallagher, Parsley’s president and chief executive officer, and AR Alameddine, Parsley’s lead director. Pioneer’s executive management team will lead the combine with the headquarters remaining in Dallas, Tex.
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