Exxon CEO to save $2 billion with Pioneer purchase with minimal job cuts
(Bloomberg) – Exxon Mobil Corp. expects to trim annual costs by about $2 billion as it integrates the $60 billion purchase of Pioneer Natural Resources Co., said Chief Executive Officer Darren Woods.
About two-thirds of the savings will come from squeezing more oil out of the U.S. Permian basin via improved fracking methods and other technological improvements, Woods said during an interview Wednesday. The remainder will come from efficiency measures.
Job cuts will be “fairly minimal,” he said just hours after announcing Exxon’s biggest acquisition in more than two decades. “We’re really focused on making sure we are leveraging the capability of Pioneer and their people.”
Woods’ assurances about minimal job cuts will come as a relief to Pioneer employees after Exxon steeply culled its ranks to contend with the pandemic-era oil slump. Between late 2019 and the end of last year, Exxon trimmed roughly 13,000 jobs, or almost one-fifth of its workforce.
Pioneer Founder and CEO Scott Sheffield said the deal is a foreshadow of what’s to come for the sector he helped to forge.
“Shale companies cannot survive on their own long term,” Sheffield said during an interview with Bloomberg Television. “They’re going to have to merge up, consolidate, and be part of diversified companies.”
Consolidation will sweep the industry over the next five years, Sheffield predicted.
Before pursuing the deal, Woods said he challenged Exxon’s shale division to demonstrate it had industry-leading production methods so that it would be able to extract oil more cheaply than competitors. The company now drills 4-mile (6.4-kilometer) sideways wells, the longest in the Permian region, and improved its fracking methods to recover oil from multiple zones at the same time in what’s known as a “cube” development, he added.
“You see a natural fit and an opportunity for us to take advantage of some of the techniques we’ve been developing, some of those technologies, and applying it to what is the premier acreage” in the Permian basin, he said.