Once oil rivals Diamondback Energy $FANG 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 $XOM first sparked this spate of energy mergers when it announced in October that it was acquiring Pioneer Natural Resources $PXD for $60 billion.
Chevron $CVX followed and announced a $53 billion deal to buy Hess the same month.
In December, Occidental $OXY 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.