Shale producer Diamondback Energy said that it would buy the largest privately held oil and gas producer in the Permian Basin, Endeavor Energy Partners, in cash and in stock deal valued at $26 billion, including debt.
The combined company will become the worlds third largest oil and gas producer in the region behind Exxon and Chevron, with both announced recent deals.
The deal comes in the prolific Permian Basin to boost production- biggest in 2023 was Exxon who bought Pioneer Natural Resources for $60 billion.
Oil and gas producing companies take advantage of their high-priced stock to secure lower-cost reserves and prepares wave in an industry that will witness more deals.
CEO Travis Stice said, “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”.
Inside the Deal
This deal will see the combined company pumping 816,000 barrels of oil equivalent per day and annual synergies of $550 million, coming up with more than $3 billion in net value over the decade
The deal to buy Endeavour consists of about 117.3 million shares of diamondback stock and $8 billion in cash. The sale comes almost 45 years after Texas oilman Autry Stephens started the company that eventually become Endeavor.
Stephens, a former engineer who become famous 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.
Endeavour’s operations plant spans about 350,000 net acres in the midland portion of the basin and it is expected 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.
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