Pioneer Natural to buy rival Parsley for $4.5b in all-stock deal

HOUSTON, Oct 21 (Reuters): Pioneer Natural Resources Co said on Tuesday it would buy smaller rival Parsley Energy Inc in a deal valued at about $4.5 billion, the latest consolidation among US shale producers slammed by the rout in oil prices during the pandemic.

Many shale companies have been mired in losses because of weak crude prices, hovering around $40 a barrel since June. But unlike in past downturns, companies have struggled to raise new capital to restructure heavy debts.

The all-stock deal would create the largest Permian Basin-only focused shale producer and is expected to add annual cost savings of $325 million. Pioneer shareholders will own about 76 per cent of the combined company.

Pioneer aims to increase cost savings and cash flow, positioning it as one of "a few investable independents," Chief Executive Scott Sheffield said on an analyst call on Tuesday.

"There's only going to be three or four survivors," Sheffield said, naming his own company, ConocoPhillips , EOG Resources Inc and "maybe" Hess Corp as likely winners that could lure investor interest.