Diamondback Energy to buy Endeavor for $26 billion

12 February 2024

US oil and gas company Diamondback Energy agreed to buy privately held rival Endeavor Energy in $26 billion cash-and-stock deal—another sign of a rapid consolidation in the US shale oil sector.

The acquisition will create the third-largest oil producer in the Permian Basin of West Texas and New Mexico, behind only ExxonMobil and Chevron. It would also be the largest oil producer operating exclusively in the Permian Basin. The combined company would have a combined 838,000 net acres and a net output of 816,000 barrels of oil equivalent per day (boe/d), behind the Exxon-Pioneer combination of about 1.3 million boe/d and Chevron’s 867,000 boe/d in the basin.

The deal comes amid a wave of consolidation in the Permian Basin. Over the past few months, ExxonMobil agreed to buy Pioneer Resources for about $60 billion, Chevron Corporation agreed to buy Hess Corporation for about $53 billion, and Occidental agreed to buy CrownRock LP for about $10.8 billion. According to industry analysts, the merger and acquisition spree in the Permian play will continue as oil and gas companies rush to secure future output by expanding their acreage through acquisitions.

Fewer wells would be needed to keep production flat in 2025 and beyond, with both companies being able to run a full business on Diamondback’s cost structure, Diamondback’s CFO Kaes Van’t Hof said as quoted by Reuters.

Diamondback will fund the deal with 117.3 million shares and $8 billion in cash. Diamondback shareholders will own 60.5% of the combined company after the deal closes. Shareholders of Endeavor, which isn’t publicly traded, will own the rest.

The deal is expected to close in the fourth quarter of 2024.

Source: Diamondback Energy