Exxon Mobil announced on Wednesday that it was acquiring Pioneer Natural Resources for $59.5 billion, deepening its reliance on fossil fuel production even as many global policymakers grow increasingly concerned about climate change and the oil industry’s reluctance to shift to cleaner energy.
Exxon has spent decades investing in projects around the world, but the deal would squarely lodge its future close to its Houston base, with most of its oil production in Texas and along the coast of Guyana.
By concentrating its operations close to home, Exxon is effectively betting that U.S. energy policy will not move against fossil fuels in a major way even as the Biden administration encourages automakers to switch to electric vehicles and utilities to make the transition to renewable energy.
Exxon executives have said that in addition to producing more fossil fuels, the company is building a new business that will capture carbon dioxide from industrial sites and bury the greenhouse gas in the ground. The technology to do that remains in an early stage and has not been successfully used on a large scale.
“We’re doubling down on our organizations and capabilities,” said Darren Woods, Exxon’s chief executive. The combined company would generate value “well in excess of what either company is capable of doing on a stand-alone basis,” he added. The focus of the deal was “on taking the best of both organizations,” he said.
American oil production has reached a record of roughly 13 million barrels a day, around 13 percent of the global market, but growth has slowed in recent years. Despite a wave of consolidation among oil and gas companies, and higher oil prices after the Russian invasion of Ukraine last year, producers are having a more difficult time finding new locations to drill.
The Pioneer deal is a sign that it is now easier to acquire an oil producer than to drill for oil in a new location.