Diamondback Energy is merging with Endeavor Energy Resources, a privately held company. The buyout is the latest in a frenzy of mergers that began in October, and analysts say it’s reflective of a matured shale industry and a long-term bet on oil and gas demand.
According to last week’s announcement, Diamondback, which is publicly traded, will pay $8 billion in cash and 117.3 million shares. Combined with Endeavor’s properties, according to calculations by S&P and Bloomberg, Diamondback will produce 801,000 barrels of oil and gas per day (“boepd”), which is 6% of the total U.S. production. This will put it in third place in the Permian behind Exxon-Pioneer, which produces 1.347 million boepd, and Occidental-Crownrock, which produces 910,000 boepd.
Shale growth
The merger with Endeavor “is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company,” Travis Stice, chairman and CEO of Diamondback, said in a statement.
Endeavor, The Wall Street Journal reports, started out from a single well that founder Autry Stephens drilled 45 years ago. Over the years, Stephens refused to sell Endeavor, even turning down offers from industry giants like Exxon. He preferred running a tightly knit operation with employees who spent their whole careers with the company. It was a cancer diagnosis, he told the Journal, that changed his mind. The deal will make Stephens one of the richest men in the world.
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