If the acquisition survives a federal antitrust review, it will be Exxon’s largest since it merged with Mobil in 1999. And some industry insiders argue the big move into West Texas shale is indicative of a changing outlook toward the green energy transition.

“It signifies that there’s a little bit more rationality coming into the energy transition. The fantasy world of having just renewables as electricity within 50 years or so is now clearly not going to happen,” Jay Hatfield, CEO of Infrastructure Capital Advisors, an investment firm that focuses on energy and infrastructure investments, told Fortune. “It’s a recognition that these forms of energy are not going away anytime soon.”

If Hatfield’s take is correct, Exxon’s new view on the energy transition would contrast with the green goals of most Western nations as they try to combat climate change. EU nations have called for a move away from fossil fuels, agreeing to the European Green Deal last year, which seeks to make the continent carbon neutral by 2050 and reduce emissions by 55% from 1990 levels by 2030. And in April 2021, President Biden set a target for the U.S. to have “carbon-pollution-free power” by 2035 and net-zero emissions by 2050. 

The administration even created the Greenhouse Gas Reduction Fund for the Environmental Protection Agency through the Inflation Reduction Act last year, which is disbursing $27 billion in loans and grants to “catalyze investment in clean energy projects and tackle the climate crisis.” 

Environmentalists were quick to rebuke Exxon’s acquisition of Pioneer on Wednesday. “This deal shows that Exxon is doubling down on fossil fuels and has no intention of moving towards clean energy,” Jamie Henn, director of Fossil Free Media, told progressive nonprofit outlet Common Dreams. “Even after the hottest summer on record, Exxon is hell-bent on driving the thermostat even higher.”

For its part, Exxon announced its “ambition” to have net-zero greenhouse gas emissions by 2050 in January 2022. But Infrastructure Capital’s Hatfield believes that Europe’s recent experience with surging natural gas prices after the war in Ukraine has helped convince U.S. energy giants—often called majors—that investing in fossil fuels is still worth doing in order to ensure American energy security, even if the world will eventually transition toward greener pastures.

Exxon’s comments when announcing the deal seem to back up that idea. The company emphasized in a Wednesday statement that the Pioneer acquisition represents “an opportunity for even greater U.S. energy security,” arguing it will help expand an important source of domestic oil and natural gas supply “benefiting the American economy and its consumers.”

Surging oil and natural gas prices enabled Exxon Mobil to capture the third spot on the 2022 Fortune 500 list, up from 6th the year prior. The energy giant’s revenue rose 45% last year to $413 billion, while its profits spiked 141% to $56 billion. The cash windfall left Exxon on the hunt for acquisitions to bolster its portfolio. To that end, it spent $5 billion on the pipeline operator Denbury in June.

Hatfield said Exxon has not only recognized “that the energy transition is going to take a lot longer than politicians had hoped,” but it’s also “de-risking” and “diversifying” its portfolio of oil and natural gas producing assets by acquiring pipeline operators and expanding into the Permian Basin. 

As far as diversification, he noted that Pioneer owns land in a different part of the Permian than Exxon: The Texas-based shale giant owns 850,000 net acres in the Midland Basin, while Exxon owns 570,000 net acres mainly in the Delaware Basin.

“There’s really two very distinct basins. And they have different infrastructure needs,” Hatfield explained. “This diversifies their [Exxon’s] Permian exposure.”

The other major reason Exxon invested in Pioneer, according to Hatfield, is because the deal may help “de-risk” the company’s portfolio of oil producing assets. He noted that the offshore oil rigs that Exxon and other energy giants have historically relied on for a huge chunk of their crude production are expensive to build and operate, which means it takes a long time to generate a return on the initial investment. 

In an era when governments worldwide are signaling that a green energy transition should happen sooner rather than later, making that type of long-term investment in offshore rigs may be hard to justify. Onshore, domestic oil production also presents fewer geopolitical risks. Israel, for example, ordered Chevron to shut down its offshore gas platform Monday as a safety precaution amid the ongoing conflict in the region.

“The lowest-risk way to get…hydrocarbons in the world is onshore in the U.S., because of political issues and because shale produces returns very rapidly,” Hatfield explained. “You drill a well and you get most of your money back in the first five years, if not faster. And so the majors are trying to de-risk their businesses by doing more onshore [in the] U.S.”