Midland-based Diamondback Energy said Monday it entered into an agreement to merge with Midland’s Endeavor Energy Resources to “create a premier Permian independent operator” that will be the fifth largest Permian producer. Purchase price is about $26 billion – $8 billion cash and 117.3 million shares of Diamondback common stock. The combined company will control about 838,000 acres in Permian Basin with 6,100 core locations and produce 816,000 boed. “This is a combination of two strong, established companies,” Travis Stice, chairman and CEO of Diamondback, said. “This combination meets all the required criteria for a successful combination: sound industrial logic with tangible synergies, improved combined capital allocation, and significant near-term and long-term financial accretion… Diamondback not only gets bigger, it gets better.”
The combined company in 2025 expects to generate oil production of 470 million to 480 million barrels of oil per day (800 million to 825 million boed) with a capital budget of about $4.1 billion to $4.4 billion (after $4.8 billion to $5.15 billion this year).
Diamondback stockholders will own about 60.5 percent of the combined company. The transaction is expected to close in 4Q.
Diamondback said the combined company will be able to break even financially with oil under $40 per barrel. New York Times said, “Deal fever has been sweeping the industry as oil and gas companies race to consolidate… The shale drilling industry has become an industrial process with the strongest companies acquiring more acreage to give themselves better options and lower costs….
“The Permian Basin was once seen as a worn-out patch,” the Times added. “But over the last decade or so, technological advances … have opened its oil- and gas-rich shale fields to development. The basin has been transformed into the most productive oil and gas field in the U.S.”