Diamondback Energy and Endeavor Energy Close to $25 Billion Merger
U.S. Shale Oil Rivals on the Brink of a Major Merger
Diamondback Energy and Endeavor Energy Resources are on the verge of finalizing a cash-and-stock deal worth approximately $25 billion. This merger would result in the formation of an oil and gas company valued at over $50 billion, according to sources on Sunday.
Impending Announcement and Shareholder Benefits
It is anticipated that Diamondback will announce the transaction imminently, with its shareholders receiving over half the combined companies, as per the sources. However, neither Endeavor nor Diamondback has responded to requests for comments.
Position in the Oil and Gas Industry
The new entity would become the third-largest oil and gas producer in the Permian Basin of West Texas and New Mexico, trailing behind Exxon Mobil and Chevron. Dan Pickering, chief investment officer of Pickering Energy Partners, believes that the combined company would replace Pioneer Natural Resources as the biggest pure-play Permian producer. This would place additional pressure on the remaining firms to consolidate for greater efficiencies and scale.
Consolidation in the Oil Industry
The largest Permian producers are consolidating in a race to secure future drilling inventory and output from the largest U.S. oilfield. The impending deal is expected to intensify the need for other firms to merge for similar benefits.
Competitive Bidding and Valuation
Diamondback successfully fended off competition from other parties, including ConocoPhillips, as reported earlier by the Wall Street Journal. Additionally, previous reports had indicated that Endeavor Energy Partners was exploring a sale that could value the company at between $25 billion and $30 billion.
Endeavor Energy’s History and Operations
Endeavor’s operations span 350,000 net acres in the Midland portion of the Permian shale basin, covering West Texas and eastern New Mexico. This potential sale would mark a significant milestone for the company, almost 45 years after its inception by Texas oilman Autry Stephens.
