In a strategic move that paid off handsomely, Texas oilman Scott Sheffield successfully positioned his company, Pioneer Natural Resources (NYSE:PXD), as a top-tier player in the highly competitive U.S. shale basin. Four years ago, Sheffield observed the growing interest of oil majors in the shale sector and set out to make Pioneer the most desirable catch among U.S. shale independents, ultimately leading to a game-changing deal with Exxon Mobil (NYSE:XOM).
Under Sheffield’s leadership, Pioneer underwent a transformation, shedding less productive properties and divesting an in-house service division. The CEO’s vision was to create a lean, profitable company, and he emerged as a prominent figure in the shale industry, advocating for the lifting of a 40-year export ban on U.S. crude oil and acquiring rival firms while predicting industry consolidation.
On October 11, Sheffield’s strategic mission bore fruit as Exxon Mobil offered a staggering $59.5 billion for Pioneer, a valuation more than twice its 2019 worth.
According to Dan Pickering, a seasoned shale investor and head of investment firm Pickering Energy Partners, “Pioneer sat in a position of being a predator and prey. He was thinking multiple steps ahead.”
Scott Sheffield’s connection to the oil industry runs deep, as his father previously served as an executive at Atlantic Richfield Co and relocated the family to Iran during Sheffield’s high school years. It was in Tehran where Sheffield developed his strong competitive spirit, excelling as a quarterback on the school’s American football team, according to his son, Bryan Sheffield.
“Scott is a huge competitor. That’s what drives him. It’s about being competitive with his peer group,” stated Bryan Sheffield, who serves as co-managing partner at investment firm Formentera Partners.
After college, Sheffield’s career began at Amoco Corp, and later he joined his father-in-law’s oil company. Five years later, he assumed the role of CEO, and that company would eventually become Pioneer Natural Resources.
Through strategic acquisitions, such as merging with corporate raider Boone Pickens’ Mesa Energy in 1997 and uncovering valuable shale oil reserves beneath its acreage, Pioneer Natural Resources evolved from a modest $30 million family business in West Texas into one of the industry’s behemoths.
Sheffield retired two decades later but returned as CEO in 2019, at a time when the company had overspent and overpromised to investors. His return saw him refocusing Pioneer exclusively on Permian oil, divesting natural gas processing, oilfield services, and South Texas shale assets, generating approximately $1 billion in cash for acquiring competitors.
Under Sheffield’s guidance, the company embraced a new corporate philosophy that prioritized delivering returns to shareholders over achieving rapid production increases. He stated in one of his initial earnings reports upon resuming control of the company, “The big change is to treat capital just as important as production.”
