Dallas-(Business line)-Pioneer Natural Resources Corporation (NYSE: PXD) (“Pioneer” or “Company”) announced today that it has reached a definitive purchase agreement to acquire the leasehold equity and related assets of DoublePoint Energy (DoublePoint). As of April 1, 2021, the value of the transaction is approximately US$6.4 billion. Including approximately 27.2 million shares of Vanguard’s common stock, $1 billion in cash, and assume approximately $900 million in debt and liabilities.
Vanguard CEO Scott D. Sheffield said: “DoublePoint has accumulated an impressive high-quality footprint in the Midland Basin, which includes a layer of land adjacent to Pioneer̵
The transaction strengthens the investment framework
- Increase key financial indicators -Pioneer expects that the transaction will increase in key financial indicators in 2021 and beyond, including cash flow and free cash flow per share, earnings per share and company earnings.
- Increased variable dividend outlook -Consistent with Vanguard’s priority of returning capital to shareholders, the value-added nature of this transaction to free cash flow has led to an increase in the expected variable dividend per share from 2022 and beyond.
- Unparalleled Permian Scale -The transaction represents approximately 97,000 high-quality net acres of adjacent positions, directly offsetting and overlapping Pioneer’s existing footprint. The acquired land was mainly undrilled land and expanded Pioneer’s senior asset base, thereby increasing the company’s land area to more than 1 million net acres without involving federal land. The company expects that by the end of the second quarter, the daily output of the acquired assets will reach approximately 100,000 barrels of oil equivalent per day.
- Significant synergy -By improving operational efficiency and reducing general and administrative (G&A) and interest expenses, it is expected that the acquisition will save approximately US$175 million in annual costs. The projected present value of these cost savings totals approximately $1 billion in ten years.
- Maintain top-level balance sheet -Vanguard’s estimated leverage index will remain relatively unchanged, at the lowest level in the industry, which will preserve the company’s financial and operational flexibility and bring substantial returns to shareholders.
Geoffrey Strong, Apollo Senior Partner and Co-Head of Infrastructure and Natural Resources commented:From a financial and operational perspective, as well as the natural fit with DoublePoint, the combination of Pioneer and DoublePoint is eye-catching. This acquisition continues the trend towards integration of the prolific Permian Basin, combining two complementary footprints in the transaction, while achieving top-line and bottom-line synergy. Dheeraj Verma, President of Quantum Energy Partners, added:We firmly believe in Vanguard’s free cash flow generation strategy, which can achieve a competitive basis and strong variable dividends. ”
Cody Campbell and John Sellers, Co-CEOs of DoublePoint Energy said: “We are proud and appreciative of the work done by our team to build a company and asset library, the quality of which is unparalleled and cannot be replicated. We are honored to have the opportunity to combine our business with Pioneer, which has always been respected by us and is regarded as the premier operator in the Midland Basin. The cooperation and synergy between the two parties is obvious, and we look forward to continuing to create value with Pioneer. ”
Pioneer will issue approximately 27.2 million shares of common stock in the transaction and an additional US$1 billion in cash. After the transaction is completed, Vanguard’s existing shareholders will own approximately 89% of the combined company’s shares, while the existing DoublePoint owners will own approximately 11% of the combined company’s shares. Vanguard plans to fund the cash portion of the purchase price through existing cash under its revolving credit line and existing borrowing capacity.
The transaction has been unanimously approved by Pioneer’s board of directors and is expected to be completed in the second quarter of 2021, depending on customary closing conditions and regulatory approvals.
The structure of this transaction is the acquisition of a 100% limited liability company by Pioneer Subsidiary of DoublePoint’s wholly-owned subsidiary Double Eagle III Midco 1 LLC.
Along with this version, the company has published a pre-recorded webcast and related investor presentations on its website.
To view the webcast and related presentations, please visit www.pxd.com>Investors>Earnings and Webcast.
To access the presentation slides, please visit www.pxd.com>Investors>Investor Presentation.
The webcast will be archived on Pioneer’s website and can be accessed here. The replay will continue until April 27, 2021.
Pioneer is a large independent oil and gas exploration and production company headquartered in Dallas, Texas, with operations in the United States. For more information, please visit Pioneer’s website www.pxd.com.
DoublePoint Energy is an upstream oil and gas company located in Fort Worth, Texas, led by the Double Eagle management team in cooperation with FourPoint Energy. DoublePoint is backed by equity commitments from Apollo Global Management, Inc. (NYSE: APO), Quantum Energy Partners, Magnetar Capital and GSO Capital Partners, LP.
Warning statement regarding forward-looking information
Except for the historical information contained herein, the statements in this press release are forward-looking statements made in accordance with the “safe harbor provisions” of the Private Securities Litigation Reform Act of 1995. Many risks and uncertainties may cause Pioneer’s actual results in the future period to materially differ from the forward-looking statements. These risks and uncertainties include (among others) the risk that the company’s business cannot be successfully integrated; the cost savings, synergy and growth resulting from the proposed transaction may not be fully realized or may take longer than expected to be realized; the management time Transfer to issues related to transactions; The impact of future regulations or legislative measures on the company or the industry in which it operates, including the risk of new restrictions on the development of company assets; The risk that Pioneer’s credit rating may be different from the company’s expectations; There is a risk that the parties to the transaction may not be able to obtain the required government and regulatory approvals for the proposed transaction, or the required government and regulatory approvals may delay the proposed transaction or result in the risk of imposing conditions that may reduce expected returns. The proposed transaction may cause the parties to abandon the proposed transaction; the risk that the conditions for completing the proposed transaction may not be met; the time required to complete the proposed transaction, which may be longer than expected due to various reasons; Potential liability arising from final or future litigation; changes that may affect the overall economic environment or social or political conditions of the business; the potential impact of the announcement or completion of the proposed transaction on the relationship with customers, suppliers, competitors, management and other employees ; The impact of this communication on Pioneer stock prices; transaction costs; fluctuations in commodity prices; product supply and demand; the impact of widespread diseases (such as the COVID-19 pandemic) on global and US economic activities; competitions; obtaining environmental permits and others The ability of the permit and its timing; the ability to obtain approval from a third party and negotiate an agreement with the third party on mutually acceptable terms; potential liabilities arising from pending or future litigation; the cost and results of drilling and operations; Availability of equipment, services, resources, and personnel required for the company’s drilling and business activities; the use and availability of transportation, processing, fractionation, refining, storage and export facilities; Pioneer has the ability to replace reserves; execute its business plan as planned or Completion of its development activities; the acquisition and cost of funds; the financial strength of pioneer credit institutions, investment instruments and derivative contract counterparties, and the purchasers of the company’s oil, natural gas liquids and natural gas production; uncertainty of reserves estimates; determination of drilling locations, and The ability to increase proven reserves in the future; Basic assumptions for forecasting, including forecasts of production, cash flow, oil well costs, capital expenditures, yields, expenses, cash flow and cash flow for oil and gas trading, deducting firm transportation commitments; sources of funds ; Tax rates; quality of technical data; environmental and weather risks, including the possible impact of climate change; cyber security risks; risks related to the ownership and operation of the company’s oilfield services business and war or terrorist acts. These and other risks are described in Pioneer’s annual report on Form 10-K for the year ended December 31, 2020, the quarterly report on Form 10-Q filed thereafter, and other documents filed with the US Securities and Exchange Commission. In addition, the company may face unforeseen risks, which may have a material adverse effect on the merged company. Therefore, there can be no assurance that actual events and results will not differ materially from the expected results stated in the forward-looking statements. Unless required by law, Pioneer has no obligation to update these statements publicly.