Pioneer Natural Resources Acquires Parsley Energy
NYSE-listed Pioneer Natural Resources Co. has entered into a definitive agreement to acquire Permian-focused Parsley Energy Inc., in an all-stock transaction valued at approximately US$7.6 billion, including the assumption of debt.
Upon closing, existing Pioneer shareholders will own approximately 76% of the combined company. Parsley’s largest investor, Quantum Energy Partners, which owns approximately 17% of Parsley’s outstanding shares, has executed a Voting and Support Agreement in connection with the transaction.
Under the terms of the agreement, Parsley shareholders will receive a fixed exchange ratio of 0.1252 shares of Pioneer common stock for each share of Parsley common stock owned. The offer constitutes a 7.9% premium to Parsley’s closing share price on October 19th.
Based on approximately 413 million shares outstanding, Parsley’s shareholders will receive around 52 million Pioneer shares, which are currently valued at US$87.05 per share (based on the closing share price on October 19th), amounting to a total equity offer of approximately US$4.5 billion. Adjusting for Parsley’s reported net debt of approximately US$3.1 billion (as of June 30th, 2020), the total transaction value on an enterprise value basis is approximately US$7.6 billion.
Upon completion, the combined entity will have an enterprise value of US$23.9 billion, and an asset base of approximately 930,000 net acres. Pro forma production during Q2-2020 for the combined company was 558 thousand barrels of oil equivalent per day (Mboe/d), of which 59% was oil. Parsley’s President & CEO Matt Gallagher and Lead Director A.R. Alameddine will join the Board of Directors of the merged entity, which will remain headquartered in Dallas, Texas.
“This transaction creates an unmatched independent energy company by combining two complementary and premier Permian assets, further strengthening Pioneer’s leadership position within the upstream energy sector,” said Scott D. Sheffield, Pioneer’s President & CEO.
Goldman Sachs and Morgan Stanley are acting as financial advisors to Pioneer, while Credit Suisse Securities and Wells Fargo Securities are advising Parsley on the deal.
The transaction has been unanimously approved by the Boards of Directors of both companies. Closing remains is subject to customary closing conditions including regulatory and shareholder approvals, and is expected to occur in Q1-2021.