Jim Cramer says it's time to move on from Pioneer after $60 billion Exxon deal announcement

Published Wed, Oct 11 20239:35 AM EDTUpdated Wed, Oct 11 202310:21 AM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Jim Cramer said Wednesday he intends to sell the Investing Club's entire Pioneer Natural Resources (PXD) position when trading restrictions allow, following the official announcement that Exxon Mobil (XOM) is acquiring the company in an all-stock deal. The transaction values Pioneer at $59.5 billion , or $253 per share. That's about 18% above where Pioneer's stock closed Oct. 5 — the session before The Wall Street Journal reported Exxon was in advanced talks to acquire the Club holding, sending shares soaring. The transaction is expected to close in the first half of 2024. "I have tremendous regard for Exxon...[but] I will sell every share of Pioneer the moment I'm allowed to because I have tremendous regard for my Charitable Trust's performance and this is not what I wanted," Jim said, referring to the takeover price. Jim Cramer's Charitable Trust owns 300 shares of Pioneer, at an average price of $230.14 apiece. Club rules prevent the Trust from trading any stock Jim mentions on CNBC television for the three subsequent trading sessions. Pioneer shares climbed 1%, to just roughly $240 each, shortly after the opening bell Wednesday. Shares of Exxon dropped more than 3%, to around $107 apiece. The Pioneer-Exxon deal comes at a volatile time for global oil markets. After prices rose throughout the third quarter – pushing global standard Brent crude to nearly $100 a barrel – signs of weaker demand emerged last week and cut into some of oil's recent gains. Then heighted geopolitical risk following Palestinian militant group Hamas' attack on Israel over the weekend initially sent prices soaring at the start of the week. Oil prices tumbled more than 1% Wednesday, with Brent trading around $87 a barrel and U.S. oil standard West Texas Intermediate crude hovering just below $85 a barrel. Exxon CEO Darren Woods told CNBC on Wednesday he doesn't foresee "any regulatory issues" complicating its acquisition of Pioneer. In recent months, Woods has touted technology advances at Exxon designed to recover more oil from its shale wells. A key benefit of the acquisition is those tools can now be applied to Pioneer's high-quality acreage in the Permian Basin, Woods said. "We have separately as two companies very similar plans in terms of growing our production. This will potentially add to that, but it will certainly lower the cost of it," Woods said. Speaking alongside Woods on CNBC Wednesday, CEO Scott Sheffield — who is in the final months of his second stint in the top job at Pioneer — said he intends to hold his Exxon stock once the deal closes. "They have a great dividend. One of the highest dividends in the S & P 500, so I'm very excited about that," said Sheffield, who is Pioneer's largest individual shareholder, according to FactSet. Meanwhile, Jim said proceeds from the Club's expected Pioneer sale could be put to work elsewhere in the market. "It's time to move on if you own the stock and find the next one," Jim said. "I want to find a company that is worth a lot [and] that gives you a good dividend. I wanted that dividend from Pioneer. It was fantastic." (Jim Cramer's Charitable Trust is long PXD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Scott Sheffield, CEO of Pioneer Resources, speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas.

Daniel Kramer | Reuters