Another Oil Giant Emerges In The Permian Basin

Midland-based Diamondback EnergyFANG was already a big upstream company in the prolific Permian Basin which straddles the border between West Texas and Southeast New Mexico. But the company led by CEO Travis Stice is now poised to become one of the region’s giants in the wake of its announced $26 billion acquisition of privately held Endeavor Energy Resources Monday.

“This is a combination of two strong, established companies merging to create a ‘must own’ North American independent oil company. The combined company’s inventory will have industry-leading depth and quality that will be converted into cash flow with the industry’s lowest cost structure, creating a differentiated value proposition for our stockholders,” Stice said in the company’s release. “This combination meets all the required criteria for a successful combination: sound industrial logic with tangible synergies, improved combined capital allocation and significant near and long-term financial accretion. With this combination, Diamondback not only gets bigger, it gets better.”

Indeed, the deal will certainly make Diamondback a much bigger company than it has already become over the past decade of Permian growth. The combined company would produce roughly 816,000 barrels of Permian oil equivalent per day today, which compares favorably to the 857,000 boed produced by Chevron, and the roughly 1.3 million by the combination of ExxonMobil and Pioneer Natural Resources once that transaction is completed later this year.