Diamondback Energy Inc. and Endeavor Energy Resources L.P. announced the signing of a definitive merger agreement, marking a move to create a premier Permian independent oil and gas company. The transaction, valued at approximately $26 billion, inclusive of Endeavor's net debt, is poised to position the combined entity as an industry leader.
Under the terms of the merger agreement, the transaction consideration comprises about 117.3 million shares of Diamondback common stock and $8 billion in cash, subject to customary adjustments. The funding for the cash portion is expected to come from a combination of cash on hand, borrowings under the company's credit facility, and/or proceeds from term loans and senior notes offerings. Following the completion of the transaction, Diamondback's existing stockholders are projected to own around 60.5% of the combined company, with Endeavor's equity holders owning approximately 39.5%.
The board of directors of the company and all necessary Endeavor approvals have unanimously endorsed the transaction.
Travis Stice, chairman and CEO of Diamondback, expressed enthusiasm for the union, saying, "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 continued, "Over the past 45 years, Mr. Stephens and his team at Endeavor have built the highest quality private oil company in the United States. 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. As a result, we look forward to continuing to deliver best-in-class results with a combined employee base headquartered in Midland, assuring Midland’s relevance in the global oil market for the next generation."
“This combination offers significant, tangible synergies that will accrue to the pro forma stockholder base,” said Stice. “Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last 12 years, and this combination allows us to bring this cost structure to a larger asset and allocate capital to a stronger pro forma inventory position. We expect both teams will learn from each other and implement best practices to improve combined capital efficiency for years to come.”
Autry C. Stephens, founder and chairman of the board of Endeavor, expressed gratitude to the Endeavor team and pride in the accomplishments since 1979. "We believe Diamondback is the right partner for Endeavor, our employees, families, and communities. Together we will create value for shareholders and our other stakeholders," Stephens said.
Lance Robertson, president and CEO of Endeavor, said, "As we look toward the future, we are confident joining with Diamondback is a transformational opportunity for us. Our success up to this point is attributable to the dedication and hard work of Endeavor employees, and today's announcement is recognition by Diamondback of the significant efforts from our team over the past seven years, driving production growth, improving safety performance, and building a more sustainable company. We look forward to working together to scale our combined business, unlock value for all of our stakeholders and ensure our new company is positioned for long-term success as we build the premier Permian-focused company in Midland."
To view additional information pertaining to the merger of both companies, visit the Diamondback Energy website.