Exxon Mobil has held initial talks to buy US shale oil giant Pioneer Natural Resources, reported The Wall Street Journal citing unnamed sources.

The talks between the two companies for a potential deal have been informal, the sources added.

Exxon, which reported record profits in 2022, is loaded with cash and, according to those familiar with the company’s plans, has been looking for a mega deal.

People with knowledge of the situation told the publication that Exxon executives have explored a prospective alliance with at least one other corporation.

Any transaction, if it materialises, is unlikely to happen until later this year or next year, the sources said, adding that, talks may not go to formal negotiations at all, or Exxon may pursue a different company.

However, they stated that Exxon is seeking a major transaction to use its windfall earnings and views Pioneer as a top candidate.

If Exxon buys Pioneer, which has a market cap of about $49bn, it would probably be Exxon’s largest deal since its megamerger with Mobil in 1999.

The deal is expected to bolster Exxon’s position in the oil-rich Permian Basin of West Texas and New Mexico.

It would bring together the top Western oil business, which is more than 140 years old and worth more than $468bn, with a driller who owns substantial oil reserves in America’s most sought-after fracking hotspot.

Texas-based Pioneer is claimed to be the leading oil producer in the Permian Basin and generated $8.4bn in cash surplus last year.

Exxon has been looking for a deal in the Permian for months, according to sources with knowledge of the situation.

In a separate development last week, The WSJ reported that Exxon has stopped drilling off the coast of Brazil after failing to find oil.