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Diamondback Energy agrees to buy Endeavor in $26bn US oil deal

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Diamondback Energy has agreed to buy Endeavor Energy Resources in a $26bn deal, beating ConocoPhilips in a race for one of America’s most sought after private oil producers.

The merger, announced on Monday, will transform Midland-based Diamondback into one of the biggest players in the sprawling Permian Basin of Texas and New Mexico, the biggest US oilfield.

Diamondback, which is valued at just $27bn, had been vying for weeks with the much larger Conoco to buy the shale oil producer.

The deal is the latest in a flurry of large-scale merger and acquisition activity in the US shale patch as companies look to snap up the best remaining drilling acreage.

ExxonMobil announced in October a $60bn deal to buy Pioneer Natural Resources, the biggest player in the Permian. That was followed shortly afterwards by Chevron unveiling a $53bn acquisition of Hess, which has assets in North Dakota’s Bakken shale and a stake in the biggest oil find of the past decade, off the coast of Guyana in South America.

Last month, Chesapeake Energy agreed to buy Southwestern Energy for $7.4bn to create the country’s biggest natural gas producer.

Endeavor was set up by wildcat billionaire Autry Stephens in 2000, emerging from a business he built up from a solitary rig in 1979. Alongside CrownRock and Mewbourne Oil, it grew to become one of the leading private operators in the country.

The company has been on the market intermittently over the years, but no would-be acquirer has ever offered enough to satisfy Stephens.

Like other private players, Endeavor has increased output sharply in recent years as publicly listed rivals have held back on drilling under pressure from Wall Street to return cash to shareholders. It produced about 400,000 barrels of oil equivalent a day towards the end of last year, more than many public players.

The surge in output from private oil groups like Endeavor has helped drive US production to record levels. The country pumped 13.3mn barrels of oil a day in November, the last month for which data is available from the Energy Information Administration, more than any country in history.


Business Asia
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