On Monday, shale producer Diamondback Energy announced its plans to acquire Endeavor Energy Partners, the largest privately held oil and gas producer in the Permian Basin, in a deal valued at approximately $26 billion, inclusive of debt, through a combination of cash and stock.
This acquisition positions the combined entity as the third-largest oil and gas producer in the Permian Basin, following behind industry giants Exxon and Chevron, the latter of which has recently undertaken similar consolidation efforts.
The move comes amidst a trend of consolidation within the prolific Permian basin aimed at enhancing production capabilities. One of the most significant consolidations in 2023 was Exxon Mobil’s acquisition of Pioneer Natural Resources in a deal valued at $60 billion.
In response to this trend, numerous public producers are engaging in discussions to acquire private producers, seeking to bolster inventory longevity for decades to come, while prioritizing cash returns to shareholders.
Travis Stice, CEO of Diamondback, emphasized the company’s track record as a premier low-cost operator in the Permian Basin over the past 12 years. He expressed optimism about the deal, stating that it enables Diamondback to extend its cost-efficient operational model to a larger asset base while strategically allocating capital to bolster its inventory position.
Upon completion of the transaction, the combined company is projected to produce approximately 816,000 barrels of oil equivalent per day (boepd), with anticipated annual synergies of $550 million. Over the next decade, this is expected to result in net value exceeding $3 billion.
The acquisition is subject to regulatory approvals and customary closing conditions, with Diamondback shareholders anticipated to hold a 60.5% stake in the combined entity, while Endeavor shareholders would own the remaining portion.
Endeavor Energy Partners currently operates across approximately 350,000 net acres in the Midland portion of the Permian Basin, spanning regions in West Texas and eastern New Mexico.