Dive Brief:
- Diamondback Energy finalized an agreement to buy rival Endeavor Energy Resources in a cash and stock deal valued at $26 billion announced Monday. The merger would create an oil and gas behemoth that would be the third largest in the Permian Basin of West Texas and New Mexico.
- The transaction will comprise approximately 117.3 million shares of Diamondback’s common stock and $8 billion in cash. The Midland, Texas-based Diamondback — valued around $27 billion — is expected to hold a majority share, 60.5%, of the new combined company and Endeavor’s equity holders are expected to own the remaining 39.5%.
- The new company will be worth more than $50 billion and be able to pump 816,000 barrels of oil and gas per day, with operations spanning across 838,000 net acres, according to the two energy companies. The merger is the latest fuel consolidation play in the oil field, following mega acquisitions from competing energy majors over the past few months.
Dive Insight:
Diamondback reportedly scored the Endeavor deal after fending off competition from other competing bidders, including ConocoPhillips, according to a report from the Wall Street Journal. Endeavor’s interest in selling itself off over the past few years has attracted attention from Shell, Exxon and Pioneer Natural Resources at various times.
“This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company,” Travis Stice, Chairman and CEO of Diamondback said in a press release.
The merger meets “all the required criteria for a successful combination: sound industrial logic with tangible synergies, improved combined capital allocation and significant near and long-term financial accretion,” he added.
The merger comes a month after Chesapeake Energy and Southwestern Energy announced a $7.4 billion all-stock merger, which is set to create the largest natural gas producer in the United States. Though this was the first major energy industry transaction of 2024, it trailed behind two of the largest M&A deals in sector history, both announced in October: ExxonMobil’s $60 billion acquisition of Pioneer Natural Resources and Chevron’s $53 billion purchase of Hess Corp.
Although Endeavor attributed part of its success to “building a more sustainable company,” and both companies said the consolidation “advances [their] leading ESG profile,” there was no direct mention of specific decarbonization initiatives the new company plans on undertaking.
A flurry of recent oil and gas acquisition deals have prompted scrutiny from environmentalists and sitting U.S. Democratic senators alike. Last year, a coalition of environmental groups — including nonprofits Greenpeace USA, the League of Conservation Voters and Sierra Club — wrote a letter to the Federal Trade Commission opposing ExxonMobil and Chevron’s purchase of Pioneer and Hess. The letter raised concerns that these mergers violated antitrust laws and were “slowing the transition to innovative energy solutions that are vital for the future of our planet in the face of climate change.”
