HOUSTON – Exxon Mobil will take 18 to 24 months to achieve its full production synergies from its $60 billion purchase of U.S. shale oil producer Pioneer Natural Resources, the company’s top shale executive said on Friday.
Exxon this week closed all-stock acquisition after agreeing to an antitrust consent order that barred the former Pioneer CEO from joining its board and is moving in coming weeks to combine operations that will form the largest oil producer in the Permian basin.
“You will see (oil production) grow pretty rapidly, year over year,” said Bart Cahir, Exxon’s senior vice president of shale, as Exxon applies its current growth strategy to the resources incorporated from Pioneer.
The purchase more than doubles Exxon’s output in the Permian, the top U.S. shale field, to about 1.3 million barrels per day of oil and gas.
‘Create magic’
An additional 700,000 barrels per day is predicted by 2027 as Exxon combines its proprietary technologies to Pioneer’s inventory – a merge that Exxon’s CEO Darren Woods previously said would “create magic.”
Those new wells should come on stream in 12-18 months, with typically another six months to develop production, he said.
“The development time horizon when you are developing at scale is around 18 to 24 months,” Cahir said. “We’re going to take a best-of-both approach to putting the organization together.”
Asked about plans to add fracking crews in the Permian this year, Cahir said he would “not going to go into the specifics”.
With Pioneer’s acreage, Exxon controls 1.4 million acres (566,560 hectares) of prime areas that will allow it to drill longer and more closely-spaced wells in cube format, he said.
Exxon has proprietary technologies that allow it to be “very, very prescriptive and targeted in our designs. That’s something that enables us to do more with less,” he said.
Integration teams
The company expects to offer positions to the “overwhelming majority” of Pioneer employees in the next two months, he said, declining to specify any cuts to Pioneer’s roughly 2,200 workers.
Integration teams from both companies have been working for six months to smooth the transition process. They “have really clicked well. We’re a lot more similar than we are different,” Cahir said.
Cahir said Pioneer’s crude oil trading team fits well into Exxon’s global trading organization, created more than a year ago.
Exxon also will move Pioneer’s oil into Exxon’s pipeline and logistics, connecting the volumes to U.S. Gulf Coast plants that produce fuels and plastics, he said.
