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Diamondback and Endeavor Discuss $50 Billion Merger

Diamondback Energy and Endeavor Energy Resources are discussing a merger that could see yet another mega-company join Exxon and Chevron in the Permian.

Per Reuters, which cited unnamed sources, the value of the deal is $25 billion in cash and stock. The source also said Diamondback shareholders will receive a collective stake of over 50% in the new company. The value of the resulting company could top $50 billion.

The Financial Times noted that if the deal was finalized, it would be a win for Diamondback over Conoco, which has also been a candidate for Endeavor, which the news outlet described as one of the most sought-after shale oil independents.

Also, the FT said Diamondback was “putting the finishing touches” to the deal, suggesting a public announcement of the tie-up is a matter of time. If closed, it would be a big win for Diamondback after its failed attempt to acquire CrownRock last year. Instead, the independent was acquired by Occidental.

Reuters wrote that the company resulting from that tie-up would be the third-largest oil producer in the Permian, behind only Exxon and Chevron. It would also be the largest oil producer operating exclusively in the Permian.

"Their (drilling) inventory is extremely high quality that will make the combined companies a very attractive investment on Wall Street. I imagine it will be well received by the market on Monday," Andrew Dittmar, senior vice president at Enverus, told Reuters.

The Diamondback-Endeavor merger extends a series of megadeals that began with Exxon’s acquisition of Pioneer Natural Resources last year, followed by Chevron’s purchase of Hess Corp., and several smaller-scale but still nine-figure deals.

According to oil analysts, the shopping spree in the Permian play will continue as drillers rush to secure future production by expanding their acreage inorganically through acquisitions.

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By Charles Kennedy for Oilprice.com

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