In a deal for over $26 billion in cash and stock, Diamondback Energy will acquire rival Endeavour Energy Resources to establish a drilling behemoth in the South-west region of the country.
Massive deals in the energy sector have been driven in recent months by growing confidence in an economic recovery, especially in the U.S. These deals include Chevron’s $53 billion acquisition of Hess in October and Exxon Mobil’s $59.5 billion deal two weeks earlier, which was the company’s largest acquisition since purchasing Mobil two decades earlier.
Together, Diamondback and Endeavour will be in charge of 838,000 acres and can produce 816,000 barrels of oil equivalent per day.
In the Permian Basin, the biggest oil field in the US, Endeavour is the biggest private operator. Every day, drillers may extract more than 4 million barrels of equivalent oil from the Permian.
A massive operator in the Permian Basin, which spans Texas and New Mexico, will be created by the Diamondback-Endeavor deal, which was confirmed on Monday. It comprises about 117.3 million shares of Diamondback common stock and $8 billion in cash.
“Our companies are headquartered across the street from one another and share a similar culture and operating philosophy, which should allow for a seamless integration of our two teams,” CEO and chairman of the Diamondbacks, Travis Stice, stated in a prepared statement.
The United States has been remarkably resilient, with a strong job market and economic growth that has astonished almost everyone, despite widespread forecasts that it would enter a recession amid a tumultuous global economy. From October through December, the country’s economy grew at an unusually rapid 3.3% annual pace.
In the combined business, Endeavor’s stockholders would possess roughly 39.5% and Diamondback Energy Inc. shareholders would own about 60.5%.
Midland, Texas will serve as the United Company’s headquarters.
The transaction has been approved by the boards of both firms, and a fourth-quarter closing is anticipated. Also, according to the company, it possesses all required Endeavour permissions.
The day before the market opened, Diamondback’s shares increased somewhat.
