Diamondback Energy Inc. and Endeavor Energy Resources are in the final stages of negotiations to merge the two companies, reports The Wall Street Journal with reference to sources. The deal can be paid for either in cash or through an exchange of shares. As a result, Diamondback shareholders will have a majority stake in the combined company. The deal, newspaper sources say, could be announced today.
The market capitalization of Diamondback itself is $27 billion. It valued its competitor at $25 billion. We are talking about a merger of two oil producers, as a result of which a new player will appear on the market with a market value of about $50 billion. The combined company will become one of the largest oil producers in the Permian Basin with production volume of approximately 400 thousand barrels per day.
This is not the first major deal in the oil sector in recent months. So, in October last year, ExxonMobil announced about the purchase of Pioneer for almost $60 billion, in the same month Chevron acquired Hess for $53 billion Occidental Petroleum late last year announced to buy CrownRock for $12 billion. Last month, energy company APA agreed to buy the smaller Callon Petroleum in a deal valued at about $4.5 billion. Finally, on January 22, US fuel trading company Sunoco announced on the purchase of NuStar Energy, an operator of pipelines and oil storage facilities. The transaction amount was $7.3 billion.
As the WSJ notes, American oil and gas companies are noticeably increasing their activity in the mergers and acquisitions market, given the significant cash reserves received in the wake of rising fuel prices and the expected decline in interest rates in the United States. Thus, according to Dealogic, the volume of transactions in the United States since the beginning of the year is already 78% higher than last year’s figure for the same period of time.