Pioneer Natural Resources Acquires DoublePoint Energy
NYSE-listed Pioneer Natural Resources Co. and its wholly-owned subsidiary Pioneer Natural Resources USA Inc. have entered into a purchase agreement with subsidiaries of privately-held Double Eagle Energy Holdings III LLC, and Unbridled Resources LLC, a subsidiary of Maverick Natural Resources LLC, to acquire the leasehold interests and related assets of DoublePoint Energy, for a total consideration of approximately US$6.4 billion, payable in cash, stock, and the assumption of debt and liabilities.
Under the terms of the deal, the total consideration of US$6.4 billion is comprised of an initial cash consideration of US$1 billion, an additional consideration of approximately US$4.47 billion, payable via issuance of 27,187,500 shares of Pioneer common stock (based on Pioneer’s closing share price of US$164.60 per share on April 1st, 2021), and the assumption of US$950 million of debt and liabilities. Upon completion, the existing Pioneer shareholders will own approximately 89% of the combined company, while the owners of DoublePoint will own around 11%. The transaction is structured as Pioneer’s acquisition of 100% of the limited liability company interests of DoublePoint’s wholly-owned subsidiary, Double Eagle III Midco 1.
DoublePoint Energy was formed as a joint venture between Double Eagle Energy Holdings III and Unbridled Resources (formerly FourPoint Energy LLC) in June 2018, and is backed by equity commitments from Apollo Global Management Inc., Quantum Energy Partners, Magnetar Capital LLC, and GSO Capital Partners LP. The company is currently focused on E&P operations, and holds interests in approximately 97,000 net acres in the core of the Midland basin in West Texas. The acreage is primarily undrilled with no exposure to federal lands, and seven currently running drilling rigs. The company has an estimated average daily production of approximately 100 million barrels of oil equivalent per day (MMboe/d) for Q2-2021.
The pro-forma combined entity will have an enterprise value of approximately US$47 billion, with approximately 920,000 net acres in the Midland basin and approximately 100,000 net acres in the Delaware basin in Texas.
“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. Pioneer will incorporate these assets into our investment model, migrating the assets from significant production growth to a free cash flow model, moderating growth for the U.S. shale industry and generating significant value for our shareholders,” said Scott D. Sheffield, CEO of Pioneer.
Based in Texas, Pioneer Natural Resources owns and operates acreage primarily in the Permian Basin in West Texas.
The transaction has been unanimously approved by Pioneer’s Board of Directors. The transaction is subject to customary closing conditions including regulatory approvals, and is expected to close in Q2-2021.