US oil companies to merge in $26 billion deal as companies rush to buy drilling land | Oil and gas companies

Two US oil and gas companies have announced plans to merge in a $26 billion ($21 billion) deal, the latest in a wave of acquisitions aimed at securing the best land for drilling.

Diamondback Energy has agreed to buy Endeavor Energy Resources in a takeover that will create a company worth about $50 billion ($40 billion).

The merger frenzy has been driven in part by rising oil prices since Russia's full-scale invasion of Ukraine two years ago, in early 2022. Companies are rushing to use their huge profits to raise their production, despite analysis by the International Energy Agency (IEA) which said new fossil fuel developments would push the world beyond the safe limits of global warming.

The quickest way to increase production is to buy competitors with rights to proven reserves. The wave of acquisitions included deals by major U.S. majors. In October, Chevron reached a $53 billion ($42 billion) deal to buy Hess, while ExxonMobil agreed to buy shale group Pioneer Natural Resources for $59.5 billion ($47 billion).

Diamondback beat out its larger rival ConocoPhillips, which had also expressed interest in buying Endeavor, the Wall Street Journal reported.

Smaller deals included Occidental Petroleums' acquisition of CrownRock for $12 billion ($9.5 billion) in December. That deal, along with the Endeavor buyout, aims to extract more oil and gas from America's vast Permian oil field, which spans much of Texas and New Mexico.

Endeavor was founded in 1979 as a single well in the Permian by Autry Stephens, who still chairs the company's board of directors. Endeavor now produces around 400,000 barrels of oil per day.

The deal values ​​Endeavor at around $26 billion. Endeavor shareholders will receive about 117 million Diamondback shares plus $8 billion ($6.3 billion) in cash, the companies announced Monday. Endeavor shareholders will own just under 40% of the new company.

Travis Stice, Chairman and CEO of Diamondback, said: “This is a combination of two strong, well-established companies merging to create a compelling North American independent oil company.

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He said Diamondback would have industry-leading depth and quality that would be converted into cash flow with the lowest cost structure in the industry.

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