Diamondback Energy and Endeavor Energy Resources merge to form leading Permian oil and gas producer

OIL AND GAS company Diamondback Energy and Endeavor Energy Resources, an exploration and production company, have agreed a merger deal worth US$26bn.

One of the oldest oil and gas producing regions in the US, the Permian Basin produced around 5.5m bbl/d of US oil in 2022, 43.6% of the nation’s total.

Already top producers in the region separately, the merger between Diamondback and Endeavor will create the third-largest producer in the Permian Basin of West Texas and New Mexico, reports the Financial Times. The combined company, worth US$50bn, will own 838,000 net acres of land, and have net production capacity of 816,000 bbl/d. It will continue to be headquartered in Midland, Texas, where both company headquarters are currently located.

Travis Stice, CEO of Diamondback, said that with the merger the company “not only gets bigger, but better”. He added: “Our companies share a similar culture and operating philosophy and are headquartered across the street from one another, which should allow for a seamless integration of our two teams. As a result, we look forward to continuing to deliver best-in-class results with a combined employee base headquartered in Midland, assuring Midland’s relevance in the global oil market for the next generation.”

Lance Robertson, CEO of Endeavor, said that joining Diamondback offers a “transformational” opportunity for his company. He added: “We look forward to working together to scale our combined business, unlock value for all of our stakeholders, and ensure our new company is positioned for long-term success as we build the premier Permian-focused company in Midland.”

The Wall Street Journal reports that Diamondback beat out ConocoPhillips for Endeavor, noting that other majors such as Shell, Exxon, and Pioneer Natural Resources, had also expressed interest.

Exxon acquired Pioneer last October for US$60bn, doubling the oil major’s production in the Permian Basin to 1.3m bbl/d. Analysts predicted that the purchase could trigger further consolidation in the Permian.

The deals come amid a wave of agreements in the energy industry, including Chevron’s US$53bn deal for Hess, Chesapeake’s US$7.4bn acquisition of Southwestern Energy, and Occidental Petroleum’s takeover of CrownRock for US$12bn. The agreements follow a windfall in oil profits, stemming from elevated oil prices in the wake of Russia’s invasion of Ukraine.