Exxon’s Planned Acquisition of Pioneer Could Squeeze U.S. Shale Oil Suppliers, Pipelines

Top U.S. oil producer Exxon Mobil’s planned acquisition of the No. 1 Permian shale producer Pioneer Natural Resources could further restrain output growth in the largest U.S. oilfield, squeezing pipeline companies and suppliers, executives and energy advisors said. Consolidation, steep cost inflation and investor demands for returns have shrunk production growth this year in the Permian shale formation in West Texas and eastern New Mexico. Permian crude production is forecast to rise this year by about 430,000 barrels per day (bpd), well below the 1 million-bpd gain in 2019, according to government data.

Exxon, the fifth largest producer in the Permian, has set an up to 1 million-bpd target for its operations there for 2025 and more recently pushed it back to 2027. Buying Pioneer would boost its output to about 1.33 million barrels of oil and gas equivalent per day, well above its goal.

“With this Pioneer deal, there is a possibility that Exxon might say they’ve achieved that growth target for Permian production and so they don’t have to grow as rapidly as they originally intended,” says Ajay Bakshani, director of analytics at research firm East Daley Analytics.

Read the source article at Reuters