Pioneer CEO Will Retire and Be Replaced By COO

(Bloomberg) — Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield, an architect of the shale boom that made the US an oil powerhouse, will retire for a second time as acquisition talk reaches a fever pitch among North American drillers.

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Sheffield, 70, will step down at year’s end and maintain a seat on the board, the company said in a statement on Wednesday. The announcement comes amid speculation that Exxon Mobil Corp. has been in early-stage talks to buy Pioneer, one of the dominant independent explorers in the prolific Permian Basin oilfield.

Sheffield’s more than 20 collective years at the helm of Pioneer is one of the longest ongoing public CEO tenures in the US oil industry. Only Hess Corp.’s John Hess has reigned longer, with almost 30 years on the job.

Sheffield said in an interview that his move has “nothing to do with Exxon” and characterized the reports of takeover talks as “rumors.”

“Scott has been a trailblazer in this industry, and he has guided Pioneer through multiple commodities and market cycles as well as recent macroeconomic challenges, including the pandemic,” Chairman Ken Thompson said. Sheffield will spend more time on “personal and philanthropic interests,” he added.

Pioneer’s stock fell as much as 2.8% in after-market US trading.

Chief Operating Officer Rich Dealy, 57, will succeed Sheffield. He’s been with the company for decades, joining one of Pioneer’s predecessor entities in 1992.

Exxon has declined to comment on any Pioneer discussions, which were first reported by the Wall Street Journal. Such a deal would reshape the US oil landscape and be Exxon’s biggest acquisition since its 1999 takeover of Mobil Corp.

Despite a recent spate of shale deals, Sheffield said in the interview that major consolidation is actually a couple of years away. The oil prices that underpin company valuations and cash flow have been too volatile of late, he said. Sheffield said he notified the board of his desire to step down last year.

“Sheffield’s retirement is noteworthy, given his accomplishments in both of his leadership stints at Pioneer and his overall reputation as a thought leader for the industry, but it should not be a surprise,” KeyBank Capital Markets Inc. analysts Tim Rezvan and Slate DeMuth said in a note to clients. “He has been a savvy and decisive leader.”

Sheffield’s retirement was announced as the company disclosed first-quarter results that included ample free-cash flow and production data.

Sheffield cut his teeth in the Permian Basin of Texas and New Mexico more than 40 years ago when he joined one of Pioneer’s predecessor companies, Parker & Parsley Petroleum Co., as an engineer. He was instrumental in the family-owned firm’s growth and 1997 merger with MESA Inc. to create Pioneer.

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Crucially, Sheffield remained in the Permian region through the dark decades when supermajors such as Exxon abandoned the basin to search for crude overseas. By the time drilling and fracking innovations developed in natural gas fields were adapted to oil deposits around 2010, Pioneer was well-placed to become one of the fastest-growing producers. The company now pumps the equivalent of more than 600,000 barrels of oil daily from Permian wells.

Sheffield also is an outspoken advocate for the US shale sector, appearing regularly at energy conferences and in television interviews to opine on everything from OPEC to government regulation. He was one of the leading voices that persuaded the U.S. government to lift a four-decade ban on most domestic crude exports in 2015.

This will be Sheffield’s second swan song. He first stepped down in late 2016 but returned less than three years later as investors soured on his successor’s strategy of aggressively pursuing production growth at the expense of shareholder returns. A vocal critic of debt, Sheffield immediately parked drilling rigs to curb spending and expanded investor payouts.

He was one of the first shale CEOs to implement a variable dividend, intended to reward shareholders with cash directly from rising oil prices. Sheffield also expanded Pioneer’s Permian holdings with the purchase of Parsley Energy and private equity backed Double Eagle in 2021.

Incorporating those assets into Pioneer’s portfolio was one of Sheffield’s goals before stepping down, he said.

Dealy, one of Sheffield’s longest-serving lieutenants, said the company is “really not going to change” and will focus on execution and small, so-called bolt-on acquisitions. “Steady as she goes,” he added.

–With assistance from Joe Carroll.

(Updates with details starting in the second paragraph)