Prolific deposits or not, experience shows that exploitation of the Permian Basin is only profitable when oil and gas prices are at the high end of their historical averages.

This is still the case in 2023, even if the year is far less lucrative than 2022. Over the first nine months, the price of a barrel equivalent - an average of oil, gas and liquids prices - realized by Pioneer was $50, compared with $72.5 at the same time last year.

Against this backdrop, the company generated $2.5 billion in cash profits - or "free cash flow" - over the first nine months of the year, compared with $5.7 billion at the same time last year. This was despite a significantly higher production volume.

Pioneer values its proven reserves at $40 billion net of debt. Exxon announced last month that it was acquiring the company for a total of $59.6 billion, or $253 per share - against a share price of $234 at the time of writing.

The transaction is expected to close within the next seven months. It will enable Exxon to double its footprint in the Permian and its so-called "unconventional" deposits.

It's probably the best thing that could have happened to Pioneer. Over the long cycle, the company - which this year produced 721,000 barrel-equivalents per day, half of which was oil - will have delivered only a pitiful return on its development investments.

As for the Permian, as might be expected, it is now the scene of forced market consolidation led by the majors - including Exxon, Chevron and Occidental. Intermediate producers are therefore reduced to hoping for a Pioneer-style fate.

M&A activity in the oil and gas sector has accelerated in recent times. For the juniors who have survived the last few difficult years, it's a question of not missing the boat.