Pioneer Natural Resources (PXD) is an oil stock worth owning on its own merits. But a new report that ExxonMobil (XOM) could take over ownership of the club is likely to unlock more value. The Wall Street Journal reported Friday, citing people familiar with the matter, that Exxon has held “informal” talks about buying Payoneer. The newspaper reported that any potential deal would not emerge until later this year or in 2024. Exxon — which generated $62 billion in free cash flow in 2022 and ended the year with nearly $30 billion in cash — has been in acquisition discussions with an oil and gas company. At least one more, according to the magazine. Shares of Pioneer jumped more than 6% on Monday, to around $221 a share — making it by far the best-performing energy stock in the S&P 500. Exxon shares fell 0.25% to just under $115 a share. Pioneer and Exxon did not immediately respond to CNBC’s request for comment on Monday. Stifel analyst Derek Whitfield told CNBC Monday that Exxon’s stated interest in Pioneer is not surprising since the Texas shale oil driller is an independent exploration and production company that “marquels” the lower 48 states. If Exxon wants to meaningfully boost the rig count in the Permian Basin, it will need depth of inventory quality, which Pioneer has, Whitfield said. The analyst, who has a Buy rating and a price target of $286 per share on PXD, said the potential for a Pioneer-Exxon deal comes down to the amount Exxon is willing to pay. “I think management wants to … improve the performance of its asset base and arguably have a higher share price before coming to the negotiating table with ExxonMobil,” Whitfield said. “It doesn’t mean that if Exxon Mobil offered a 25% premium, it wouldn’t happen. Personally, that was the number I had in mind. If I saw a 25% premium, I think that would get them up to the table because, let’s be real, Every independent wants to be taken over by ExxonMobil.” The club believes it may take some time for Pioneer to seriously consider selling. A premium of 25% from where Pioneer closed Thursday, at about $208 a share, would value the shares at about $260 each. However, Jim Cramer said Monday that he believes Pioneer CEO Scott Sheffield — an industry veteran in his second stint leading the company — would be reluctant to sell below $285 a share. This is the all-time closing high for Pioneer stock, which was reached in June 2022. “I’m not saying it won’t sell. I’m saying it won’t sell below where this stock was, given the fact that oil could go back to $90. [a barrel]due to the fact that it has the best Permian assets.” WTI — the US oil benchmark — was down more than 1% Monday afternoon, at $79.70 a barrel. Exxon reported interest in the company, adding to our stake in PXD twice last month. at levels below the market price on Monday.The last purchase of 25 shares came on March 20 at about $185 apiece.Pioneer’s attractiveness stems in large part from its high-quality space and low oil prices at about $39 a barrel.This enables the company able to generate huge amounts of free cash flow and return most of it to shareholders through share repurchases and quarterly dividends Pioneer and other Permian operators may be viewed more favorably Stifel Whitfield believes the magazine story could put a near-term bottom line on Pioneer’s share price “A view that we share. At the very least, Pioneer shareholders are likely to remain invested in Pioneer. And that’s certainly our intention at this time. What I think will boost the shareholder base because you now have an article directly linking ExxonMobil to Pioneer, and the way that’s been done,” Whitfield said. Created out, there’s clearly interest there.” “I think if you see Pioneer in [a] A much higher share price in the past, that gives you more conviction to hold onto now. (Jim Cramer’s Charity Fund is long PXD. See here for a full list of stocks.) With Jim Cramer, you’ll receive a trade alert before Jim places a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his Charity Fund’s portfolio If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade.Investment Club information above is subject to our terms and conditions and privacy policy, along with our disclaimer.No fiduciary obligation or A duty issued by you, or created by virtue of your cause.Any information given in connection with the investment club.No specific outcome or profit is guaranteed.
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Permian Basin rigs in 2020, when US crude oil production fell by 3 million per day, Wall Street pressure forced production cuts.
Paul Ratje | Afp | Getty Images
Pioneer Natural Resources (PXD) is an oil stock worth owning based on its merits. But a new report Exxon Mobil (XOM) can take ownership of the club is likely to unlock more value.
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