Parsley Energy has a market value of about $4 billion.
Photo: nick oxford/Reuters
Pioneer Natural Resources Co. is in talks to buy Parsley Energy Inc., according to people familiar with the matter, as a wave of consolidation takes hold in the beleaguered oil patch.
The two oil-and-gas companies, shale producers that operate in the Permian Basin of Texas and New Mexico, are discussing an all-stock deal that could be completed by the end of the month assuming the talks don’t fall apart, the people said.
Austin, Texas-based Parsley has a market value of about $4 billion. It also has more than $3 billion of debt.
The combination would be the latest in a series of tie-ups among energy producers seeking to scale up amid the coronavirus pandemic, which has eroded oil demand. That has caused a historic collapse in U.S. benchmark oil prices, which briefly plunged below zero in April and have since rebounded to around $41 a barrel.
A deal would follow close on the heels of ConocoPhillips’s $9.7 billion agreement Monday to buy Concho Resources Inc. Devon Energy Corp. agreed last month to a $2.6 billion merger with WPX Energy Inc., while Chevron Corp. agreed in July to buy Noble Energy Inc. for about $5 billion.
Buying Parsley would give Pioneer additional acreage in the Permian, solidifying the company’s place as one of the largest oil producers in America’s top oil field.
Pioneer Chief Executive Scott Sheffield is the father of Parsley’s co-founder and chairman, Bryan Sheffield. Based in Irving, Texas, Pioneer has a market value of roughly $15 billion after its shares dropped by nearly two-thirds from a high in mid-2014.
The elder Sheffield previously ran Pioneer from 1997 to 2016. He returned to the company in 2019 after Pioneer strained to meet production goals and its costs soared under his successor. The company recently said Chief Financial Officer Richard Dealy would become president and chief operating officer early next year, likely setting him up to eventually take over.
Parsley was founded by Bryan Sheffield along with Mike Hinson and Paul Treadwell in 2008, and named for Mr. Sheffield’s late maternal grandfather, Joe Parsley, whose hundreds of small-but-steady West Texas wells gave rise to a dynasty.
Parsley’s current CEO, Matt Gallagher, came over a decade ago from Pioneer. Mr. Gallagher, who is in his late 30s, is one of the youngest chief executives in the oil patch and earlier this year joined Pioneer in calling for Texas regulators to limit oil output in the state for the first time in decades. Like rivals, Parsley has been working to reduce drilling and spending to keep costs low.
Parsley is set to report third-quarter earnings Oct. 28, while Pioneer is set to report Nov. 4.
Write to Cara Lombardo at [email protected] and Rebecca Elliott at [email protected]
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Appeared in the October 20, 2020, print edition as ‘Permian Energy Firms Hold Talks.’
