Feb 12, 2024 - Business

Diamondback Energy to buy Endeavor for $26 billion

Illustration of an arrow made of oil pointing up

Illustration: Natalie Peeples/Axios

Oilfield consolidation was last year's top M&A trend, and it may be a repeat performance.

Driving the news: Diamondback Energy on Monday announced an agreement to buy privately held Endeavor Energy Partners for $26 billion in cash and stock.

  • The combined company would become the Permian Basin's third-largest producer, and hold 838,000 net acres that produce around 816,000 barrels of oil-equivalent per day.
  • Diamondback says the $26 billion price-tag includes assumed debt.

The big picture: This comes against the backdrop of elevated oil prices, in part driven by Middle Eastern conflicts, record-high domestic production, and strong profits.

  • But the biggest M&A driver is acreage scarcity in strong shale plays like the Permian, particularly as some existing wells have run dry.
  • It's literally a land grab, as we noted last December when Occidental agreed to buy CrownRock for $12 billion.

The big question: Will the Federal Trade Commission be moved to act by the preponderance of oilfield mergers, if not by the individual transactions.

  • The agency currently is investigating at least three pending deals: Exxon's $65 billion deal for Pioneer Natural Resources; Chevron's $60 billion tie-up with Hess; and Occidental/CrownRock.
  • And that doesn't even address broader energy industry compression, like last month's natural gas deal between Chesapeake Energy and Southwestern Energy.

The bottom line: The shale property limits aren't going to change, so expect these deals to keep flowing unless there's a major change to the macro or regulatory conditions.

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