© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin of Loving County.
(Reuters) – Pioneer Natural Resources (NYSE 🙂 shares fell more than 6% due to the US oil producer’s $ 6.4 billion acquisition of rival DoublePoint Energy, months after a major deal took for investors were surprised, and the sector was still recovering from last year’s crisis. Pioneer’s fourth multi-million dollar shale deal this year comes as investors in the shale patch have asked producers to focus on cash flow and shareholder profitability, rather than spending to grow, as the demand remains low due to the COVID-19 pandemic. In January, Pioneer closed its purchase of Parsley Energy (NYSE 🙂 for $ 4.5 billion, giving it one of the largest positions in the Permian Basin, the main US shale field. RBC Capital Markets said that he was surprised that Pioneer made such a large acquisition after Parsley Energy and that the justification seemed to be part opportunistic and part defensive. The stock-and-cash deal from DoublePoint Energy, the largest privately owned oil producer in the US since 2011, increases Pioneer’s interests in the Permian to more than 1 million net acres. KeyBanc downgraded Pioneer’s rating to “sector weight” and said it was “one of the highest purchase prices we have seen in years, and it was surprising given the fact that it is largely undeveloped and a bit thinner for the market. PXD average surface quality “. DoublePoint Energy will add 97,000 acres to Pioneer’s Permian Basin properties and analysts at Cowen & Co praised the deal, saying it “undoubtedly fits like a glove within PXD’s Midland Basin acreage and … expected increases from variable dividends. per share in 2022 “. Morgan Stanley (NYSE 🙂 said the overlapping acreage of the two companies provides industry rationale for the transaction and believed that the deal would increase Pioneer’s free cash flow. Pioneer shares fell 6.1% to $ 154.52, slightly more than the 3% drop in oil prices.