Exxon
and
Chevron
opened the floodgates for oil megadeals. Now another big deal has hit the books.
Diamondback Energy
and Endeavor Energy Resources agreed to merge to create an oil-and-gas giant worth more than $50 billion.
The stock-and-cash deal, which would create a leading player in the Texas Permian basin, values privately held Endeavor at around $26 billion,
Diamondback
said in a statement. Diamondback stock was flat in the premarket. Endeavor didn’r immediately respond to a request for comment early Monday.
It’s the latest megadeal in the oil-and-gas industry after
Exxon
and
Chevron
both announced large acquisitions at the end of last year. Exxon agreed to buy
Pioneer Natural Resources
in October, and Chevron announced a deal to buy just a couple of weeks later–each totaling about $60 billion.
Occidental Petroleum
agreed a $12 billion deal to acquire private shale producer CrownRock in December.
Consolidation in the sector looks to be continuing. The trend is being fueled by oil prices enjoying a sweet spot of being not too high and not too low. This makes it easier for companies to agree on a price for a buyout. Prime land in the Permian Basin is also becoming more sought after amid tensions in the Middle East and concerns that a broader conflict could cause supply problems there.
Other energy companies appear to be thinking the same way. Diamondback, which has a market capitalization of $27 billion, fought off competition from other rivals, including
ConocoPhillips,
The Wall Street Journal reported.
The industry has a long history of big mergers. In the late 1990s, Exxon famously bought Mobil and
BP
bought Amoco, followed closely thereafter by the merger of Conoco and Phillips. More recently,
Shell
bought BG Group for its natural gas assets in 2016.
That history suggests the current fertile environment may mean the deal boom isn’t over yet.
Write to Callum Keown at [email protected]
Read the full article here
