Diamondback inks $26 billion deal for Endeavor

Diamondback Energy Inc., Midland, plans to pay about $26 billion in stock and cash for Endeavor Energy Resources to create a company that would control about 838,000 acres in the Permian basin and produce more than 810,000 boe/d.

If completed late this year as planned, the enlarged Diamondback would operate about 6,100 core locations in the Permian. Total annual cost savings are forecast to be $550 million, driven in large part by Diamondback’s lower cost structure and about 100,000 acres held by the two companies that touch or overlap.

Speaking on a Feb. 12 conference call, chairman and chief executive officer Travis Stice—who called Endeavor “the highest-quality private oil company in the United States”—said the two companies’ combined capital spending is on track to be $4.8-5.15 billion this year but would fall to $4.1-4.4 billion in 2025 while output would be maintained.

Endeavor was founded in 1979 by Autry Stephens, who currently serves as chairman. He and his team are forecasting 2024 production of 350,000-365,000 boe/d (about 195,000 b/d of oil) and $2.5 billion in capital projects spending. Adding those operations to Diamondback’s would create the Permian’s fifth-largest company, Endeavor and Diamondback said.

“You have the acreage to be able to weather down cycles and perform well in up cycles,” president Kaes Van’t Hof said on the conference call about the proposed combination.

Several analysts praised the planned deal. Nick Pope at Seaport Research Partners told clients that Endeavor’s assets “fit nearly perfectly” with Diamondback’s operations in the Midland basin, which increase the chances that the combined organization can hit its cost-savings targets. At Enverus Intelligence Research, senior vice-president Andrew Dittmar said the deal is set to make Diamondback “the standard bearer for Permian pure plays” and noted that the rough prices per Endeavor location and acre are lower than those of other recently announced transactions.

Word of Diamondback’s plan to buy Endeavor comes a little more than a year after the company completed its deal for Lario Permian, which itself closed on the heels of the purchase of FireBird Energy (OGJ Online, Oct. 11, 2022; Nov. 16, 2022). Stice and Van’t Hof said last fall—on the heels of big acquisition news from ExxonMobil and Chevron—that they wanted Diamondback to continue to be a buyer of assets.

Shares of Diamondback (Ticker: FANG) increased on word of its Endeavor plans: In late-morning trading Feb. 12, there were changing hands around $167, up more than 10% from their close of the previous Friday. The jump took the stock price to near its highest point of the past 6 months and pushed Diamondback’s market capitalization back above $30 billion.