In 1998 Exxon made history with its acquisition of Mobil Corp. The deal was worth an unprecedented $75.3 billion resulting in the formation of the largest global energy company in the world. Nearly 25 years later ExxonMobil (Exxon) is at it again, this time closing a $60 billion deal with the US shale giant, Pioneer Natural Resources.

There are few firms capable of multi-billion-dollar mammoth moves. In 1998 the larger oil and gas industry was suffering from depleted prices. Margins were lean and the bigger players came to believe that mergers were the only way to survive. Exxon is now in a more favorable position with its sights more firmly set on US oil production.

Pioneer Natural Resources is one of the largest US shale companies and as a combined entity the two are expected to control approximately 16 billion barrels of oil equivalent. Pioneer drills primarily in the Permian Basin of New Mexico and West Texas and the joint production could double to over 1.3 million barrels of oil equivalent per day.

 A bet on US oil production moves Exxon away from its historic practices of scouring the globe for untapped oil reserves. Once US fracking proved resilient and effective, Exxon refocused its energy stateside, and analysts posit approximately 45% of the company’s barrels will now come from the States.

Before 2022, Exxon had navigated some troubled waters. The company posted its first annual loss in decades in 2020 and later went through costly legal snafus that left the current CEO, Darren Woods, on shaky ground. But record annual profits of $55.7 billion in 2022 quieted the naysayers. Last year the Houston-based titan became the fourth-most prosperous US publicly traded company behind the three tech giants Alphabet, Apple, and Microsoft.

Exxon’s cash windfall surely had much to do with the Pioneer acquisition. The deal is the largest this year amidst little merger-and-acquisition (M&A) activity. Globally, the M&A volume is roughly $2 trillion, down a troubling 30% compared to 2022. While the deal will certainly consolidate Exxon’s position, the deployment of additional drilling rigs in the US is unexpected in the short term. Investor pressure is centered on returns as opposed to growth so it is unlikely that drillers will increase supply even in the face of rising prices.