Diamondback Energy to buy Endeavor Energy in $26 billion mega shale deal

Shale producer Diamondback Energy said on Monday it would buy the largest privately held oil and gas producer in the Permian Basin, Endeavor Energy Partners, in a cash-and-stock deal valued at about $26 billion, including debt.

The combined company would be the third largest oil and gas producer in the region behind Exxon and Chevron, with the latter also having announced recent deals.

The deal comes amid a wave of consolidation in the prolific Permian basin to boost production – the biggest in 2023 was Exxon Mobil buying Pioneer Natural Resources in a $60 billion deal.

Several public producers are in talks to buy private producers to improve longevity of inventories for decades, with publics now focused on cash that can be returned to shareholders.

“Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last 12 years, and this combination allows us to bring this cost structure to a larger asset and allocate capital to a stronger pro forma inventory position,” Diamondback CEO Travis Stice said in a statement.

The deal would see the combined company pumping 816,000 barrels of oil equivalent per day (boepd), and annual synergies of $550 million, coming up to more than $3 billion in net value over the next decade.

Diamondback expects the deal to close in the fourth quarter and its stockholders are expected to own 60.5% of the combined entity, while Endeavor shareholders are expected to own the rest.

Endeavour’s operations span about 350,000 net acres in the Midland portion of the Permian, which straddles West Texas and eastern New Mexico.