October 7, 2023 [Reuters]- Shares of Pioneer Natural Resources (PXD.N) climbed 11% on Friday on news that Exxon Mobil (XOM.N), the largest U.S. oil and gas company, was in advanced talks to buy the shale producer in a deal valued at a whopping $60 billion.

A deal would be Exxon’s biggest since its $81 billion acquisition of Mobil in 1998. It would make the company one of the leading producers in the lucrative Permian basin, the largest U.S. shale oil field as the country’s oil production closes in on an all-time record of 13 million barrels a day.

Pioneer’s shares were trading at $238.50 on Friday, valuing the company at nearly $56 billion, while Exxon shares were down 1.2%. The offer implies a roughly 20% premium to Pioneer’s Thursday close. A deal’s value can change at any time in negotiations.

The premium is in line with other E&P mergers this year, but “still strikes us as slightly low for a company with the unique scale and quality of inventory held by Pioneer,” said Andrew Dittmar, a director at Enverus.

Friday’s gains leave Pioneer’s stock short of the implied offer, as it is possible that the two companies will not reach an agreement.

“Would not expect Exxon to pay a substantial premium for the assets given the limited number of alternative buyers out there for something of this scale,” said RBC Capital Markets analysts Biraj Borkhataria.

Pioneer holds an estimated 6,300 net locations of high-quality inventory, according to Enverus.

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