Diamondback & Endeavor Merging to form 50 Billion Dollar Permian Oil Company

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Rivals Diamondback Energy and Endeavor Energy Resources are merging to create an oil-and-gas behemoth worth more than $50 billion, as higher oil prices and a rush to grab prime acreage fuel consolidation in the energy sector.

Diamondback announced the deal with the closely held Endeavor on Monday morning. The Wall Street Journal reported on Sunday that a merger was likely.

Endeavor, founded by wildcatter Autry Stephens, has long been one of the most prized businesses in the consolidating Permian Basin, the largest U.S. oil patch that straddles West Texas and New Mexico.

In striking a deal for Endeavor, Diamondback fended off competition from other parties including ConocoPhillips, according to people familiar with the matter.

The stock-and-cash deal valued Endeavor at around $26 billion, and Diamondback shareholders would own the majority of the combined company after it closes. Diamondback, based in Midland, Texas, has a market value of around $27 billion.

A pair of megadeals by Exxon Mobil and Chevron late last year helped prompt a flurry of deals in the sector. It is another sign that the U.S. economy is proving surprisingly resilient and that for many companies, it is business as usual even amid elevated interest rates.

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Diamondback went public in 2012 and has been one of the fastest-growing frackers, with its crude production growing around 50 times in the past decade to reach more than 260,000 barrels of oil per day. It has been adding to its inventory of wells through acquisitions.

A tie-up with Endeavor grants the combined company top-tier status in the Permian, endowing it with nearly as much acreage in the basin as rival ConocoPhillips, and crude production likely eclipsing 400,000 barrels per day.

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While many American frackers have seen oil-well productivity decline as they have drilled through their best locations—a big factor in recent deals—Endeavor has the largest remaining inventory of top-tier oil acreage of any private Permian company, according to energy-analytics firm Flow Partners.

It has also been one of the most active producers in the region. The company was among private operators that kept drilling through the Covid-19 pandemic and helped U.S. crude production recover rapidly after a lull.

Following Exxon’s nearly $60 billion all-stock deal to buy Pioneer last fall, Chevron announced a $53 billion all-stock deal to purchase Hess the same month. Occidental Petroleum late last year revealed a $10.8 billion agreement to buy West Texas producer CrownRock. Last month, energy company APA agreed to buy smaller peer Callon Petroleum in a deal valued at about $4.5 billion including debt.

Elsewhere in the energy space, Southwestern Energy and Chesapeake Energy agreed to a merger in January that created one of the largest natural-gas producers in the U.S.

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