Workers attach drill bits and drill bit holders, used to extract natural oil, on Endeavor Energy Resources’ Big Dog 22 drilling platform in the Permian Basin outside Midland, Texas.
Brittany Sowacke | Bloomberg | fake images
shale producer Diamond Back Energy said on Monday it would buy the Permian Basin’s largest private oil and gas producer, Endeavor Energy Partners, in a cash-and-stock deal valued at about $26 billion, including debt.
The combined company would be the region’s third-largest oil and gas producer behind Exxon and Chevron, the latter of which has also announced recent deals.
The deal comes amid a wave of consolidation in the prolific Permian Basin to boost production; the largest in 2023 was Exxon Mobil’s purchase of Pioneer Natural Resources in a $60 billion deal.
Several public producers are in talks to buy private producers to improve the longevity of inventories for decades, and the public is 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 past 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 allow the combined company to pump 816,000 barrels of oil equivalent per day (boepd) and annual synergies of $550 million, bringing it to more than $3 billion in net value over the next decade.
Diamondback expects the deal to close in the fourth quarter and its shareholders are expected to own 60.5% of the combined entity, while Endeavor shareholders are expected to own the remainder.
Endeavor’s operations encompass about 350,000 net acres in the Midland portion of the Permian, which straddles western Texas and eastern New Mexico.