Wednesday, February 21

Diamondback, Endeavor in Talks to Form $50B Energy Giant

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(Bloomberg) — Diamondback Energy Inc. and Endeavor Energy Resources are in final discussions toward a deal that would create an oil-and-gas giant worth more than $50 billion, people with knowledge of the matter said.

Closely held Endeavor would be valued at around $25 billion in the stock-and-cash deal, which may be announced as soon as Monday, said the people, who asked not to be identified because the talks aren’t public. Diamondback has a market capitalization of $27.2 billion. The Wall Street Journal reported on the discussions earlier Sunday.

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Representatives for Diamondback and Endeavor, both based in Midland, Texas, didn’t immediately respond to requests for comment from Bloomberg.

The US is the world’s biggest oil producer, in large part due to frenetic drilling in the Permian Basin of Texas and New Mexico. Oil is in high demand despite efforts to transition away, with consumption expected to rise through 2030 — and perhaps beyond. 

A combination of Diamondback and Endeavor would be the latest in a string of major mergers that has reshaped the corporate landscape in US shale oil recently. In the previous 12 months, Exxon Mobil Corp. agreed to acquire Pioneer Resources for about $60 billion dollars, Chevron Corp. agreed to buy Hess Corp. For about $53 billion, and Occidental Petroleum Corp. reached an accord to purchase CrownRock LP for about $10.8 billion.

The wave of consolidation marks a maturing of the shale industry, which previously was fragmented, lacked few players of a significant size and struggled to attract mainstream investors. Also driving the deals has been a desire by some of the biggest operators to replenish their inventory of land that can be drilled and fracked.

Endeavor was widely seen as one of the last potential major candidates for consolidation in the Permian. Founded by Autry C Stephens, it remains one of the last big closely held producers, and has attracted the interest of Exxon, Chevron and ConocoPhillips.

Endeavor holds a significant position in the Permian Basin with rights to about $350,000 acres, and produces about 331,000 barrels of oil equivalents per day, according to Bloomberg intelligence.

(Updates with background on shale industry, Endeavor starting in graf 5)

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