Pioneer's $6.4 billion deal for DoublePoint accelerates U.S. shale oil consolidation

(Reuters) -U.S. oil producer Pioneer Natural Resources agreed on Thursday to acquire privately-held rival DoublePoint Energy for about $6.4 billion, speeding up a consolidation of shale oil producers.

Oilfield rollups have accelerated this year as energy prices recover following last year’s coronavirus-driven market crash. Companies with strong balance sheets have been snapping up debt-laden and privately-held operators, and promising to focus on profit over volume growth.

Acquisitions of fast-growth oil companies like DoublePoint Energy by mature operators “will allay concerns that U.S. shale could again oversupply the market and crash prices,” said Andrew Dittmar, an Enverus merger and acquisitions analyst.

The deal, which Reuters first reported, is Pioneer’s second big purchase and the fourth multi-billion shale deal this year. In January, Pioneer closed its $4.5 billion, all-stock purchase of Parsley Energy, giving it one of the largest positions in the Permian Basin, the top U.S. shale field.

In January, ConocoPhillips completed its $9.7 billion purchase of Concho Resources, and Devon Energy wrapped up its $5.8 billion purchase of WPX Energy. Last year, Chevron Corp bought Noble Energy for about $12.1 billion in stock and debt.

DoublePoint Energy will add 97,000 acres to Pioneer’s holdings in the Permian Basin. The driller was formed in 2018 by serial entrepreneurs Cody Campbell and John Sellers and backed by Apollo Global Management Inc and Quantum Energy Partners.

The stock-and-cash acquisition is the largest of a privately-held U.S. oil producer since 2011. It increases Pioneer’s holdings in the Permian to more than one million net acres. Pioneer said it expects to close the deal by June.

Pioneer plans to slow DoublePoint’s production growth by paring its active drilling rigs to five from seven. The deal will add to Pioneer’s earnings and cash flow per share beginning this year, it said.

“Pioneer plans to transition DoublePoint to a moderate-growth, cash flow generating business,” said Enverus’ Dittmar. “What we’re seeing is a maturing of the shale industry and its re-focusing on financial discipline and capital returns through rollups.”

Reporting by Arundhati Sarkar in Bengaluru and Gary McWilliams in Houston; Editing by Uttaresh.V and Muralikumar Anantharaman