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Diamondback energy and Endeavor energy to merge, forming $50 billion oil giant

In a new development, US shale oil rivals Diamondback Energy and Endeavor Energy Resources are on the verge of finalising a deal worth approximately $25 billion in cash and stock, as reported by Reuters.

This merger is poised to create a colossal oil and gas entity valued at over $50 billion, positioning itself as the largest pure-play oil producer in the Permian shale field.

Reuters cited Dan Pickering, the Chief Investment Officer of Pickering Energy Partners, who expressed confidence in the strategic alignment of the merger, stating, “This is a layup in terms of the acreage overlap and fit.”

He highlighted the combined company’s potential to supersede Pioneer Natural Resources as the leading Permian producer, attributing the success to the synergistic consolidation of assets.

The Permian Basin, a key battleground for energy companies, is witnessing a wave of consolidation driven by the imperative to secure future drilling inventory and enhance output efficiency.

Analysts anticipate that this impending deal will exert pressure on other firms in the region to pursue similar mergers, aiming for enhanced operational efficiencies and scale in the fiercely competitive landscape.

Andrew Dittmar, Senior Vice President at Enverus, underscored the significance of Diamondback’s cash and stock utilisation in facilitating the retention of Endeavour founder Autry Stephens and family’s substantial role in the newly formed entity.

He also highlighted the high-quality drilling inventory possessed by both companies, anticipating a favourable reception from investors upon the deal’s announcement.

The merger marks a significant milestone for Endeavor Energy, which traces its roots back almost 45 years to its inception by Texas oil magnate Autry Stephens.

Endeavor’s operations span 350,000 acres in the Midland section of the Permian Basin, showcasing its robust presence in the heart of the prolific oilfield.

(With inputs from Reuters)

Source: Thanks