ExxonMobil declared an all-stock agreement to buy Pioneer for $59.5 billion.

Exxon Mobil said today that it will pay $59.5 billion to acquire its longtime competitor Pioneer Natural Resources, or $253 per share.

With this tactical manoeuvre, Exxon assures ten years of cost-effective production and establishes itself as the dominant player in the largest U.S. oilfield.

If completed, this acquisition would be Exxon's most significant business transaction since its $81 billion acquisition of Mobil Oil in 1998 and the biggest corporate deal of the year. After the merger, a substantial chunk of the Permian Basin shale formation and its enormous oilfield infrastructure would be under the hands of four of the biggest U.S. oil firms.

Given the impending retirement of founder and CEO Scott Sheffield, “we continue to believe that Pioneer is a willing sale. Since the onset of horizontal drilling in the Midland Basin in the early 2010s, which established Pioneer as one of the most core inventory-rich [exploration and production companies] in the most productive U.S. shale oil basin, this final transaction would be the last of many smart deals for him”, KeyBanc analysts wrote in a note.

"We believe a price closer to $250 than $278/share may be better received by [Exxon] shareholders," the analysts continued.

U.S. competition officials, who have recently increased scrutiny on high-profile business acquisitions, would certainly evaluate any alliance.

Exxon’s shares are currently down 4.5% and Pioneer is up around 0.4%.

(Sources: investing.com, reuters.com)