Pioneer Natural Resources Co. ’s $6.4 billion deal to buy DoublePoint Energy this week is the latest sign of renewed interest in smaller shale drillers as oil prices recover from last year’s pandemic lows.
The deal, announced Thursday evening, was the largest acquisition of a privately held shale company since 2011. It follows the sale of a number of smaller oil-and-gas companies and demonstrates momentum in what had been a moribund market, according to executives, investors and data from consulting firm Enverus.
The market for private oil-production firms had collapsed in recent years as investors, frustrated following years of dismal returns, pushed larger shale companies to curtail investments and stop buying smaller debt-laden companies.
That has changed in recent months—at least for the private companies with better assets and lower debt—as U.S. benchmark prices hover above $60 a barrel. A surge in the shares of U.S. oil producers, following the rollout of Covid-19 vaccines and a slow but steady recovery in oil demand, is enabling larger companies to use their equity to pay for targeted acquisitions.
Pioneer, led by Chief Executive Scott Sheffield, plans to issue 27.2 million shares and spend $1 billion in cash in the DoublePoint deal, set to close in the second quarter. It will assume about $900 million of the smaller company’s debt and liabilities.
