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

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

The acquisition, which could be announced as soon as Monday, would transform Midland-based Diamondback into one of the biggest players in the sprawling Permian Basin of Texas and New Mexico, the biggest US oilfield.

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

Beating Conoco, which has a market capitalisation of around $132bn, would be a big win for Diamondback, which is valued at just $27bn, after it lost out to another bigger rival Occidental Petroleum in its attempt to buy CrownRock last year.

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

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

The deal would be the latest in a flurry of large-scale merger and acquisition activity in the US shale patch as companies look to snap up the best remaining drilling acreage.

ExxonMobil announced in October a $60bn deal to buy Pioneer Natural Resources, the biggest player in the Permian. That was followed shortly afterwards by Chevron unveiling a $53bn acquisition of Hess, which has assets in North Dakota’s Bakken shale and a stake in the biggest oil find of the past decade, off the coast of Guyana in South America.

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

Endeavor was set up by Stephens in 2000, emerging from a business he built up from a solitary rig in 1979. Alongside CrownRock and Mewbourne Oil, it grew to become one of the leading private operators in the country.

The company has been on the market intermittently over the years, but no would-be acquirer has ever offered enough to satisfy Stephens.

Like other private players, Endeavor has ramped up output sharply in recent years as publicly listed rivals have held back on drilling under pressure from Wall Street to return cash to shareholders. It produced around 400,000 barrels of oil equivalent a day towards the end of last year, more than many public players.

The surge in output from private oil groups like Endeavor has helped drive US production to record levels. The country pumped 13.3mn barrels of oil a day in November, the last month for which data is available from the Energy Information Administration, more than any country in history.

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