Pioneer’s Recent Multibillion-dollar Buying Spree Strengthens US Shale, CEO Says

Pioneer Natural Resources Co. is doing its part to help the U.S. shale industry, claims Scott Sheffield, the company’s CEO.

As the oil sector continues to rebound from the pandemic-driven crash of last year, some in the industry have raised concern over whether rising oil prices will derail that recovery by encouraging another drilling binge by U.S. shale producers. The main concern, Sheffield told analysts on an earnings call May 5, are privately held producers.

“Our acquisition helps the situation,” said Sheffield, referring to the company’s recent purchase of DoublePoint Energy LLC, a private equity-backed E&P company with a formidable position in the Midland Basin.

According to Enverus, Pioneer’s purchase of DoublePoint in a cash-and-stock transaction worth roughly $6.4 billion was the largest acquisition of a private U.S. E&P since 2011. Pioneer announced the closing of the DoublePoint deal on May 4 alongside strong first-quarter results.

“If other [public oil and gas] companies take out other privates,” Sheffield continued, “they would help too.”

Enverus’ senior M&A analyst, Andrew Dittmar, echoed this sentiment in early April following the announcement of Pioneer’s agreement to acquire DoublePoint Energy.

“Roll-ups of these high-growth private companies by public E&Ps focused on fiscal discipline is certainly one way to address that concern,” Dittmar said.

Pioneer plans to moderate growth by reducing the number of rigs on the DoublePoint acreage, which added 97,000 net acres in the Midland Basin to Pioneer’s asset base. Production from the acquired assets was projected to hit 100,000 boe/d by the transaction’s close.

“I hope other privates are taken out that are growing too much,” Sheffield said. “They still have a large part of the rig count.”

Still, any uptick in drilling by privately backed shale producers at this time won’t upset the output cuts being made by OPEC, he said. A lot of the private E&Ps, Sheffield noted, are currently concentrated in the Haynesville Shale.

“There are a few other deals that are out there,” he said mentioning a Central Basin Platform package by Chevron Corp. that’s currently on the market and another package for sale in the Delaware Basin from Occidental Petroleum Corp.

“It will be interesting to see what they go,” he said, “but I don’t know of any other privates at this point in time that are going to be able to sell in this marketplace.”

However, Sheffield said Pioneer, which has closed two multibillion-dollar acquisitions in the Permian Basin this year so far, is not currently looking to acquire.

In particular, Sheffield noted on the call that another “large opportunity in the Midland Basin” he had mentioned in the past to analysts and Pioneer shareholders is no longer available.

In addition to its acquisition of DoublePoint, Pioneer also completed the acquisition of Parsley Energy, which had assets in both the Midland and Delaware sub-basins of the Permian, for $7.6 billion in January.

Combined, Pioneer has spent $14 billion adding assets to its pure-play position in the Permian Basin in about six months. The company now has an acreage position of more than 1 million net acres in the Permian Basin with no exposure to federal lands plus close to 15,000 Tier 1 drilling locations.