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Diamondback Energy, a prominent shale producer, announced on Monday its intention to acquire Endeavor Energy Partners, the largest privately held oil and gas producer in the Permian Basin. The cash-and-stock deal, valued at approximately $26 billion, including debt, positions the combined entity as the third-largest oil and gas producer in the region, following Exxon and Chevron, both of which have recently announced significant deals.
Amid a trend of consolidation in the prolific Permian basin, aimed at enhancing production capabilities, Diamondback's acquisition of Endeavor is notable. This move follows Exxon Mobil's $60 billion deal to acquire Pioneer Natural Resources in 2023, reflecting a strategic approach among public producers to bolster inventories for long-term sustainability, with a focus on cash returns to shareholders.
Travis Stice, CEO of Diamondback, highlighted the company's proven track record as a premier low-cost operator in the Permian Basin over the past 12 years. He emphasised that the combination with Endeavor allows Diamondback to extend its efficient cost structure to a larger asset and strategically allocate capital to strengthen its pro forma inventory position.
Upon completion of the deal, the combined company is projected to produce 816,000 barrels of oil equivalent per day (boepd) and generate annual synergies of $550 million, translating to over $3 billion in net value over the next decade. Diamondback anticipates the closure of the transaction in the fourth quarter, with its stockholders expected to own 60.5% of the combined entity and Endeavor shareholders holding the remaining stake.
Endeavor's operations encompass approximately 350,000 net acres in the Midland portion of the Permian Basin, spanning West Texas and eastern New Mexico. The acquisition further underscores the dynamic landscape of the energy sector, with companies strategically positioning themselves to navigate challenges and capitalise on opportunities for sustained growth.
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