U.S. oil and gas producer Continental Resources Inc (CLR.N) said on Wednesday it has agreed to buy the Delaware Basin assets of peer Pioneer Natural Resources (PXD.N) for $3.25 billion, expanding Continental's operations into Texas.
It is the latest sign that soaring crude prices are emboldening some U.S. energy companies to pursue deals as they seek to ramp up production.
Founded in 1967 by billionaire wildcatter Harold Hamm, Continental has focused on drilling wells in the Bakken of North Dakota and Oklahoma's SCOOP/STACK shale formations.
The company entered Wyoming's Powder River Basin earlier this year through a small acquisition. The deal with Pioneer gives it a claim to the Delaware portion of the Permian Basin, the heart of the U.S. shale industry.
"Continental's foundation has always been built upon a strong geology-led corporate strategy. This continues today and has directly led us to our new strategic position in the Permian," said Bill Berry, who took over from Hamm as chief executive at the start of 2020.
Continental's shares dropped 5.6% on Wednesday after Reuters revealed that the companies were nearing a deal ahead of the official announcement. Pioneer shares ended trading almost flat.
"I think the move speaks to Continental's need to add inventory and the challenges of finding it in scale in the basins where they currently operate," said Enverus senior M&A analyst Andrew Dittmar.
Reuters reported in September that Pioneer was seeking to sell the assets in a bid to streamline its business and reduce debt after two big acquisitions this year.