big deal

Potential $50B Texas energy giant emerges as Diamondback seeks to buy rival Endeavor

A tie-up between Diamondback and Endeavor, if it succeeds, would create a player in the massive Permian Basin oil and gas field that straddles Texas and New Mexico. Photo via Unsplash

Diamondback Energy will attempt to buy rival Endeavor Energy Resources to create an energy giant in the Southwestern United States worth more than $50 billion.

Growing confidence in an economic recovery, particularly in the U.S., has driven massive deals in the energy sector in recent months, including Chevron's $53 billion acquisition of Hess in October, and a $59.5 billion deal two weeks before that by Exxon Mobil, its biggest acquisition since buying Mobil two decades ago.

A tie-up between Diamondback and Endeavor, if it succeeds, would create a player in the massive Permian Basin oil and gas field that straddles Texas and New Mexico.

It would be the third largest producer in the Permian behind Exxon and Chevron, overseeing 838,000 acres and potentially producing 816,000 oil-equivalent barrels each day.

Diamondback said Monday that it will buy Endeavor in a cash-and-stock deal valued at about $26 billion.

Endeavor is the largest private operator in the Permian Basin. Drillers can pull more than 4 million barrels of oil equivalent from the Permian daily and the rush is on to secure prime real estate in the largest oil field in the United States with little sign that the U.S. economy is slowing as many had expected.

“Our companies share a similar culture and operating philosophy and are headquartered across the street from one another, which should allow for a seamless integration of our two teams," Diamondback Chairman and CEO Travis Stice said in a prepared statement.

Despite broad expectations that it would dip into recession in a turbulent global economy, the U.S. has proven surprisingly resilient, with a red hot job market and economic growth that has surprised almost everyone. The nation’s economy grew at an unexpectedly brisk 3.3% annual pace from October through December.

Shareholders of Diamondback Energy Inc. will own about 60.5% of the combined company, while Endeavor’s equity holders would own approximately 39.5%.

“Diamondback and Endeavor’s assets are highly contiguous and offer opportunities to capture operational and overhead synergies through a combination,” Stifel's Derrick Whitfield said in an analyst note, explaining that the deal will add low-cost inventory to Diamondback's Midland Basin position.

The Diamondback, Endeavor deal confirmed Monday includes approximately 117.3 million shares of Diamondback common stock and $8 billion in cash, and will create a huge operator in the Permian Basin that straddles Texas and New Mexico.

The combined company will be based in Midland, Texas.

The boards of both companies have approved the deal, which is expected to close in the fourth quarter. It also has all of the necessary Endeavor approvals, the companies said.

Diamondback's stock rose nearly 2% before the market open.

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A View From HETI

Huntsman Corp. celebrated the opening of the new R&D center in Tienen, Belgium, this month. Photo via Huntsman

A Houston-based global leader of innovative chemistries strengthened its research and development capabilities by opening a new international innovation center.

Huntsman Corp. celebrated the opening of the new R&D center in Tienen, Belgium, on June 13.

The 11,000-square-meter facility is a world-scale analytical laboratory; two machine halls; and fully equipped and automated product testing facilities. According to the company, the facility will assist with the “journey from the formulation of initial ideas at lab scale through to the manufacture of novel systems and samples ready for customers to trial.”

The innovation center will house more than 100 scientists from the company's polyurethanes and performance products. In key markets, which include adhesives, coatings and sealants; automotive; elastomers; energy; furniture and bedding, and insulation, will support the application of Huntsman technologies. The polyurethanes division is a global leader in MDI-based polyurethanes, which serves more than 3,000 customers in over 90 countries worldwide.

The inauguration event on June 13 was attended by more than 100 customers, suppliers, the mayor of Tienen and business partners. The event also included presentations from Huntsman's Chairman and Chief Executive Officer Peter Huntsman, and Tony Hankins, President of Huntsman's polyurethane business.

"Today marks a significant milestone as we officially open the doors to our new European innovation center, a facility dedicated to creativity, collaboration and progress," Huntsman says in a news release. "We already have a rich legacy of innovation in Belgium. This center reflects our continuing commitment to exploring new ideas and turning imaginative concepts into practical solutions that can make a positive impact in the world."

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