KEY POINTS

  • The merger would form a company with combined revenues of $10 billion
  • With a market value of about $4 billion, Parsley is also saddled with more than $3 billion of debt
  • Pioneer is currently valued at about $14 billion

Pioneer Natural Resources Co. (PXD) has entered into discussions to acquire Parsley Energy (PE) as low energy prices continue to drive consolidation in the oil and gas sector.

The Wall Street Journal reported that both companies – which operate shale oil businesses in Texas and New Mexico -- are contemplating an all-stock transaction that could close by the end of this month.

The merger would form a company with combined revenues of $10 billion and production in excess of 550,000 barrels of oil equivalent a day, the Financial Times reported.

Pioneer is currently valued at about $14 billion and delivered daily production of 375,000 barrels of oil equivalent in the second quarter. Parsley delivered 183,000 barrels a day over that period. With a market value of about $4 billion, Parsley is also saddled with more than $3 billion of debt.

Interestingly, Pioneer and Parsley already have close ties. Parsley was established by Bryan Sheffield, the son of Pioneer chief executive officer Scott Sheffield. Matt Gallagher, the current CEO of Parsley, spent five years working at Pioneer.

Should a Parsley-Pioneer deal occur, it would mark the latest in a series of energy company mergers in response to sagging demand and low commodity prices wrought by the COVID-19 pandemic.

On Monday, ConocoPhillips (COP) agreed to purchase Concho Resources for $9.7 billion.

While crude oil prices have recovered somewhat – now trading at about $40 per barrel – they are still down by one-third year-to-date. As a result, energy producers and drillers have scrambled to cut costs while lowering output.

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