Texas Oil Rivals Hook Up In Another Massive Energy Merger

Diamondback Energy is picking up Endeavor in a deal that will create a $50 billion player in the Permian Basin.

Photo of an oil drill in Texas
Photo by Roy Luck via CC BY 2.0

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They’re still wheeling and dealing over in Texarabia.

Diamondback Energy and Endeavor Energy Resources, two rival oil companies, have agreed to merge into one Permian Basin giant driller valued at roughly $50 billion. It’s the latest in a string of mega deals in a sector that’s continued to see activity despite high interest rates bogging down M&A transactions in other industries.

Come Together Right Now

Diamondback, which began operations in 2007 and went public five years later, has become one of the fastest-growing companies in the Permian Basin, the 75,000-square-mile oil and gas-rich area spanning across Texas and New Mexico. The company gained new wells through its acquisitions of groups like QEP Resources, Energen, Ajax Resources, and others.  

In this latest stock-and-cash deal, Diamondback will acquire Endeavor for roughly $26 billion. When the deal closes, Diamondback will control about 840,000 acres and expects to produce 816,00 barrels of oil and gas per day. 

Dealmaking and consolidation have become the name of the game as energy companies look to scale:

  • In October, Chevron announced it was buying Hess for $53 billion, and not just because it wants a new toy truck every Christmas. As part of the deal, Chevron obtained a 30% stake in the Stabroek Block, an oil and gas site off the coast of Guyana.
  • Shortly before that, Exxon said it was purchasing Pioneer Natural Resources for roughly $60 billion, doubling its production volume in the Permian Basin. 

Dig a Little Deeper: Both the International Energy Agency and OPEC forecast oil demand to grow in the next two years. Russia’s invasion of Ukraine, the Israel-Hamas War, and other Middle Eastern conflicts continue to tighten oil supplies and drive up prices. So despite pushes for clean energy, black gold likely won’t be phased out any time soon.