Pioneer Natural Resources announced last Thursday it entered into a definitive agreement to acquire the leasehold interests and related assets of DoublePoint Energy; the value of the transaction was at approximately $6,4 billion.
Firstly, the agreement contemplates approximately 27.2 million shares of Pioneer Natural Resources common stock; in addition to $1 billion in cash, as well as the assumption of approximately $0.9 billion of debt and liabilities.
Secondly, the agreement would allow Pioneer to be accretive on key financial metrics; including cash flow and free cash flow per share; also, earnings per share and corporate returns during 2021 and beyond.
Thirdly, it would also allow the company to return capital to its stake holders. While creating annual cost savings of approximately $175 million through operational efficiencies; as well as reductions in general and administrative expenses. Overall, Pioneer expects to have a total in cost savings of approximately $1 billion over a 10-year period.
On the other hand, Pioneer will issue 27.2 million shares of common stock in the transaction, with an additional $1 billion of cash. After closing the agreement company’s shareholders will own around 89% of the combined company; while DoublePoint’s owners will own approximately 11 per cent.
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Pioneer Natural Resources to solidify its position in the Permian Basin
Moreover, Scott D. Sheffield, Pioneer’s CEO said. “DoublePoint has amassed an impressive, high quality footprint in the Midland Basin, comprised of tier one acreage adjacent to Pioneer’s leading position. We are pleased with their decision to become long-term partners with Pioneer in a transaction that will complement our unmatched position in the core of the Permian Basin.”
He also remarked. “Pioneer Natural Resources will incorporate these assets into our investment model, migrating the assets from significant production growth to a free cash flow model; also, moderating growth for the U.S. shale industry and generating significant value for our shareholders.”
On the other hand, Cody Campbell and John Sellers, Co-CEO’s of DoublePoint Energy remarked. “We are proud and appreciative of the work that our team has done to build a company and an asset base that is unparalleled in quality and truly cannot be replicated.”
Finally, they concluded. “We are honored to have the opportunity to combine our business with Pioneer Natural Resources; who we have long admired and regard as the premiere operator in the Midland Basin. The fit and the synergies are clear, and we look forward to working with Pioneer to continue creating value.”