Pioneer’s $6.4bn Acquisition of DoublePoint Energy

By Mariona Planella Boix, Ismael Fathy Martínez, Pau Rodríguez Coll, Yair Trachtenberg (ESADE), Tim Bamberger & Affan Ahmed (King’s College London)


Overview of the deal

Acquirer: Pioneer Natural Resources Company

Target: Doublepoint Energy LLC

Implied Equity Value: N/A

Total Transaction Size: $6.4B

Closed date: 01/04/2021

Target advisor: JP Morgan

In the deal, Pioneer will issue approximately 27.2 million shares of common stock and $1 billion in cash. Current Pioneer shareholders will own approximately 89% of the merged company after closure while existing DoublePoint shareholders will own approximately 11%. Pioneer plans to finance the cash portion of the purchase price through a combination of cash-on-hand and existing borrowing capacity under its revolving credit facility. The transaction is structured as the acquisition by a Pioneer subsidiary of 100% of the limited liability company interests of DoublePoint’s wholly-owned subsidiary, Double Eagle III Midco 1 LLC.

“DoublePoint has amassed an impressive, high-quality footprint in the Midland Basin, comprising tier one acreage adjacent to Pioneer’s leading position. We are pleased with their decision to become long-term partners with Pioneer in a transaction that will complement our unmatched position in the core of the Permian Basin. ” - Scott D. Sheffield, CEO (Pioneer)

Company Details: (Acquirer - Pioneer Natural Resources Company)

Pioneer Natural Resources is an American energy company, which engages in hydrocarbon exploration, with a focus on shale gas extraction.

Founded in 1997, headquartered in Irving, Texas (USA)

CEO: Scott D. Sheffield

Number of employees: 2,323 (2019)

Market Cap: $32.96B (as of 01/04/2021)

EV: $34.69B

LTM Revenue: $7.07B


LTM EV/Revenue: 4.9x


Company Details: (Target - DoublePoint Energy)

DoublePoint Energy LLC is a Fort Worth, Texas-based upstream oil and gas company. It was formed in 2018 by the combination of the Double Eagle team in partnership with FourPoint Energy (joint venture). DoublePoint's owners include Apollo Global Management, Blackstone Group's GSO Capital Partners, Magnetar Capital, and Quantum Energy Partners.

Founded in 2018, headquartered in Fort Worth, Texas (USA)

CEO: Cody Campbell and John Sellers

Number of employees: Undisclosed

Market Cap: N/A (privately held)

Projections and Assumptions

Short-term consequences

By the end of the June quarter, the company expects production from the acquired acres to reach 100,000 barrels of oil equivalent per day. Pioneer Natural had previously increased daily production potential to 558 thousand barrels of oil equivalent with the Parsley Energy acquisition. Pioneer Natural would become one of the largest producers in the Permian Basin, the United States' most prolific oil reserve, since acquiring its Midland Basin neighbor. Pioneer Natural will add 97,000 high-quality net contiguous acres to its current asset base as a result of the bolt-on acquisition. The acquisition would increase the acquirer's overall basin holdings to more than 1 million net acres. Its shares have gained 87%, underperforming the industry’s 123.3% rally in the past six months.

Long-term Upsides

Pioneer’s acquisition of DoublePoint is a strategic transaction that stems from the pursuit to further consolidate the company’s position in the Permian Basin which accounts for approximately 40% of all oil production in the United States. DoublePoint’s high-quality footprint in the Midland Basin will complement Pioneer’s unmatched position in the core of the Permian Basin leading to robust top-and bottom-line synergies in the long run. Firstly, the transaction is expected to yield cost-saving synergies of roughly $175 million per year through an overall enhancement in operating efficienc