Diamondback Energy and Endeavor Energy Resources are on the verge of finalizing a merger that would result in the creation of an oil-and-gas behemoth valued at over $50 billion. This deal, primarily executed through stock and cash, would establish the combined company as a dominant player in Texas’ prolific Permian basin. Reliable sources have indicated that privately held Endeavor could potentially be evaluated at $25 billion. The majority ownership of the merged entity would be held by Diamondback shareholders. An official announcement regarding the merger is expected imminently, possibly even as early as Monday.
This potential merger adds to the growing list of megadeals within the oil-and-gas industry. Following in the footsteps of Exxon and Chevron, who made significant acquisitions towards the end of last year, Diamondback and Endeavor are poised to continue this trend. In October, Exxon agreed to purchase Pioneer Natural Resources in a transaction worth approximately $60 billion. Shortly thereafter, Chevron announced its own deal, with an associated price tag of $60 billion as well, to acquire another industry player. Furthermore, Occidental Petroleum secured a $12 billion agreement to acquire private shale producer CrownRock in December.
Fuelled by favorable oil prices, these consolidation efforts are being facilitated by a market that finds itself in an ideal position. The pricing of oil is currently within a balanced range, not overly high nor too low, making it conducive for parties to reach mutually agreeable terms and conditions during negotiations. Moreover, prime land situated within the Permian Basin is becoming highly sought after due to mounting tensions in the Middle East and the apprehension of supply disruptions should a broader conflict arise.
Other energy companies are taking notice and following suit. According to reports, Diamondback managed to ward off competitive bids from rivals such as ConocoPhillips during this particular merger process. This momentum in deal-making within the industry shows no signs of abating, indicating a potentially extended period of heightened activity.