[COPY] Why a Deal between Exxon and Pioneer is Bad for the Oil Industry

Shifting investments from long-cycle to short-cycle will hasten an energy crisis.

Dear Readers,

We are reposting this article because of talks/rumors that the deal will be announced on Wednesday, (tomorrow morning Texas Time). We will be surprised if the board of Pioneer accepts the offer. PXD stock closed at $237.41 on Tuesday. Rumors have it that Exxon is paying $250 a share. That is about 20% higher than the price when the WSJ broke the story a few days ago. As we concluded in the article below, a deal is bullish for oil but not good for the world!

On October 5, the Wall Street Journal reported that Exxon Mobil was “closing in on a deal” with shale producer Pioneer Energy Resources. While the news triggered an increase in Pioneer’s stock (PXD) by about $20 the following morning, several market observers took the news with a grain of salt.  This is not the first time rumors have been circulated about an acquisition of the shale driller. Pioneer’s stock rose by about $20 in the past only to fall fast when it was revealed that the news of a potential deal was based on rumors.  What we know so far is that there is an offer on the table and Pioneer’s board will most likely reject it.