Diamondback Snaps Up Endeavor in $26 Billion Permian Deal

Diamondback will buy Endeavor Partners in deal that will create the third-largest oil and gas producer in the Permian Basin

by Victor Adetimilehin

Diamondback Energy, a U.S. oil producer, announced on Monday that it will acquire Endeavor Energy Partners, a privately held rival, in a cash-and-stock deal worth $26 billion. The deal is the latest in a series of mergers and acquisitions in the Permian Basin, the top U.S. shale oilfield.

Creating a Permian Powerhouse

The deal will create the third-largest oil and gas producer in the Permian Basin, behind Exxon Mobil and Chevron, which have also made recent deals in the region. The combined company will have a production capacity of 816,000 barrels of oil and gas per day (boepd), and a vast inventory of drilling locations.

The deal will also allow Diamondback to lower its costs and improve its efficiency, as both companies have complementary assets and operations in the Midland portion of the Permian. Diamondback’s Chief Financial Officer Kaes Van’t Hof said that fewer wells would be needed to keep production flat in 2025 and beyond and that the company would eventually sell some non-core assets.

The deal consists of about 117.3 million shares of Diamondback common stock and $8 billion in cash. Diamondback’s stockholders will own 60.5% of the combined entity, while Endeavor will own the rest. The deal is expected to close in the fourth quarter of this year.

A Long Journey for Endeavor

Endeavor was founded by Texas oilman Autry Stephens almost 45 years ago. He grew the company by acquiring the unloved acreage of his competitors and extracting oil and gas profitably. Endeavor’s operations span about 350,000 net acres in the Midland Basin and it expects to produce some 350,000 to 365,000 boepd in 2024.

Moreover, the deal will guarantee the continued influence of Stephens and other Endeavor shareholders in the business, as they will hold a 39.5% stake in; the combined company. Stephens said that he was proud of what Endeavor had achieved and that he looked forward to working with Diamondback to create value for all stakeholders.

A Bright Future for Permian Oil

The deal is a sign of the resilience and attractiveness of the Permian Basin, which has been the engine of the U.S. shale oil boom. Despite the challenges posed by the COVID-19 pandemic, low oil prices, and environmental regulations, the Permian Basin remains a hot spot for investment and innovation.

However, the deal also reflects the trend of consolidation in the basin, as smaller and mid-sized players seek to join forces with larger and more efficient ones. The goal is to leverage economies of scale, optimize the use of resources, and enhance the profitability and sustainability of the oil and gas business.

With the demand for energy expected to rebound in 2024 and beyond, the Permian Basin is poised to play a key role in powering the global economy and advancing the transition to a cleaner and greener future.

Source: Reuters

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