Diamondback Energy close to buying Endeavor in $25 billion US oil deal

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Diamondback Energy is closing on a deal to buy Endeavor Energy Resources for about $25 billion, according to people familiar with the matter, beating out ConocoPhilips in a race for one of America’s most sought-after private oil producers.

The acquisition, which could be announced as early as Monday, would turn Midland-based Diamondback into a major player in the vast Permian Basin of Texas and New Mexico, the largest oil field in the United States.

Diamondback is putting the finishing touches on a deal, people say, after weeks of competing with Conoco to snap up Endeavor, owned by wildcat billionaire Autry Stephens.

Beating Conoco, which has a market capitalization of about $132 billion, would be a big win for Diamondback, which is valued at just $27 billion, after losing to another larger rival, Occidental Petroleum, in its bid to buy CrownRock last year.

Occidental, backed by Warren Buffett, announced a $12 billion deal for CrownRock, another sought-after private producer, in December.

Diamondback and Endeavor did not respond to requests for response, while Conoco declined to comment. The advanced talks were first reported Sunday by the Wall Street Journal.

The deal would be the latest in a series of large-scale merger and acquisition activity in the U.S. shale sector as companies try to snap up the best remaining drilling acreage.

ExxonMobil announced in October a $60 billion deal to buy Pioneer Natural Resources, the largest operator in the Permian. That was followed shortly after by Chevron unveiling its $53 billion acquisition of Hess, which owns assets in the Bakken shale in North Dakota and a stake in the largest oil discovery in a decade, off the coast of Guyana in South America.

Last month, Chesapeake Energy agreed to buy Southwestern Energy for $7.4 billion to create the country’s largest natural gas producer.

Endeavor was founded by Stephens in 2000, emerging from a business created from a solitary rig in 1979. Along with CrownRock and Mewbourne Oil, it has grown to become one of the country’s largest private operators.

The company has been on the market intermittently over the years, but no potential buyer has ever offered enough to satisfy Stephens.

Like other private operators, Endeavor has ramped up production sharply in recent years as publicly traded rivals have held off on drilling under pressure from Wall Street to return cash to shareholders. Late last year it was producing around 400,000 barrels of oil equivalent per day, more than many public players.

Increased production by private oil groups like Endeavor has helped drive U.S. production to record levels. The country pumped 13.3 million barrels of oil per day in November, the latest month for which Energy Information Administration data is available, more than any other country in history.

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