Diamondback in $26B deal to buy Endeavor Energy in growing Permian push
Endeavor's operations span about 350,000 net acres in the Midland portion of the Permian
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Shale producer Diamondback Energy said on Monday it would buy the largest privately held oil and gas producer in the Permian Basin, Endeavor Energy Partners, in a cash-and-stock deal valued at about $26 billion, including debt.
The combined company would be the third-largest oil and gas producer in the region behind Exxon and Chevron, with both having announced recent deals.
The deal comes amid a wave of consolidation in the prolific Permian Basin to boost production - the biggest in 2023 was Exxon buying Pioneer Natural Resources in an about $60 billion deal.
Oil and gas producers are taking advantage of their high stock prices to secure lower-cost reserves and prepare for the next upheaval in an industry that is likely to witness more deals.
"Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last 12 years, and this combination allows us to bring this cost structure to a larger asset and allocate capital to a stronger pro forma inventory position," CEO Travis Stice said in a statement.
The deal would see the combined company pumping 816,000 barrels of oil equivalent per day (boepd) and annual synergies of $550 million, coming up to more than $3 billion in net value over the next decade.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| FANG | DIAMONDBACK ENERGY INC. | 207.76 | +0.66 | +0.32% |
| PXD | PIONEER NATURAL RESOURCES CO. | 268.83 | -6.20 | -2.25% |
| XOM | EXXON MOBIL CORP. | 117.86 | -3.50 | -2.88% |
| CVX | CHEVRON CORP. | 165.89 | +0.62 | +0.38% |
Reuters had on Sunday reported about merger talks between Diamondback and Endeavor, citing sources.
The deal to buy Endeavour consists of about 117.3 million shares of Diamondback common stock and $8 billion in cash. The sale comes almost 45 years after Texas oilman Autry Stephens started the company that would become Endeavor.
Stephens, a former appraisals engineer who became more known through his appearances on the TV documentary series Black Gold, grew Endeavor by acquiring the unloved acreage of his competitors and managing to extract oil and gas profitably.
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Endeavor's operations span about 350,000 net acres in the Midland portion of the Permian and it expects to produce some 350,000 to 365,000 barrels of oil equivalent per day in 2024.
Diamondback expects the deal to close in the fourth quarter and its stockholders are expected to own 60.5% of the combined entity, while Endeavor will own the rest.