The largest privately held producer of oil and gas in the Permian Basin, Endeavor Energy Partners, will be acquired by shale producer Diamondback Energy (FANG.O), opens new tab, on Monday for cash and shares in a deal estimated to be worth over $26 billion, including debt.
With the recent agreements announced by both Exxon (XOM.N) and Chevron (CVX.N), the merged business would be the third largest producer of oil and gas in the area.
In an effort to increase output, the Permian Basin is seeing a wave of consolidation. The largest of these deals occurred in 2023 when Exxon acquired Pioneer Natural Resources (PXD.N) for an estimated $60 billion.
Profiting from high stock prices, oil and gas firms are securing less expensive reserves and getting ready for the next big shakeup in an industry that will probably see more mergers and acquisitions.
“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,” Travis Stice, Diamondback’s CEO, said in a statement
Under the terms of the agreement, the merged business would produce 816,000 barrels of oil equivalent per day (boepd) and $550 million in annual synergies, translating into a net worth of more than $3 billion over the following ten years.
Reuters had reported on the merger negotiations between Endeavor and Diamondback on Sunday, citing sources.
Approximately 117.3 million shares of Diamondback common stock and $8 billion in cash are exchanged in the Endeavour purchase agreement. The firm that would become Endeavor was founded by Texas oilman Autry Stephens, and the transaction occurs over 45 years after that.
Stephens, a former appraisals engineer who rose to prominence on television documentaries like Black Gold, expanded Endeavor by buying his rivals’ abandoned land and successfully extracting gas and oil.
In the Midland section of the Permian, Endeavour operates on around 350,000 net acres, and by 2024, it hopes to produce between 350,000 and 365,000 barrels of oil equivalent per day. Diamondback anticipates that the transaction will conclude in the fourth quarter, with its investors anticipated to control 60.5% of the merged company and Endeavor holding the remaining shares.
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