February 27, 2024

The sun is seen behind a crude oil pump jack in the Permian Basin

Combined, the two Midland, Texas-based companies expect to produce 816,000 barrels of oil and gas a day.
Image: Agnus Mordant (Reuters)

Once oil rivals Diamondback Energy and Endeavor Energy Resources announced Monday (Feb. 12) that they are merging to create a $50 billion oil giant in the Permian Basin. The deal is just the latest in a wave of consolidation in the US energy sector.

Diamondback is set to acquire Endeavor in a stock-and-cash deal valued at $26 billion. Diamondback stock rose nearly 8% during morning trading following the news. Its market cap currently sits at $29 billion.

Combined, the two Midland, Texas-based companies expect to produce 816,000 barrels of oil and gas a day, according to a press release. They would be producing enough oil to break even if the West Texas Intermediate, the US benchmark for oil prices, hit under $40 a barrel. Its current price is $77. Their combined production will span across 838,000 acres in the Permian Basin that straddles west Texas and east New Mexico.

“This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company,” said Travis Stice, chairman and CEO of Diamondback in a statement. “With this combination, Diamondback not only gets bigger, it gets better.”

The deal is expected to close in the fourth quarter of 2024 with Diamondback shareholders owning about 60.5% of the combined company and Endeavor shareholders owning the other 39.5%.

US energy consolidation by the numbers

This merger follows other deals in the sector in recent months.

ExxonMobil first sparked this spate of energy mergers when it announced in October that it was acquiring Pioneer Natural Resources for $60 billion.

Chevron followed and announced a $53 billion deal to buy Hess the same month.

In December, Occidental Petroleum announced it was buying CrownRock for $12 billion.

And in January, APA announced it will buy Callon Petroleum for $4.5 billion.

These mergers come as the International Energy Association reported that demand for oil and other fossil fuels would peak by 2030.

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