MIDLAND, Texas - Diamondback (NASDAQ:FANG) Energy, Inc. (NASDAQ: FANG) and Endeavor Energy Resources, L.P. have announced a definitive merger agreement valued at approximately $26B, inclusive of Endeavor's net debt. The transaction will create a leading independent operator in the Permian Basin, with Diamondback acquiring Endeavor in a stock and cash deal. The merger is expected to close in the fourth quarter of 2024.
The consideration for the merger will consist of around 117.3 million shares of Diamondback common stock and $8B in cash. The cash portion will be funded through a mix of cash on hand, borrowings, and proceeds from potential term loans and senior notes offerings. After the merger, Diamondback stockholders will own about 60.5% of the combined entity, with Endeavor equity holders owning the remaining 39.5%.
Both companies' boards have approved the merger, which is still subject to customary closing conditions, including regulatory approval and the approval of Diamondback's stockholders. The merger is not contingent on financing.
Diamondback's CEO, Travis Stice, highlighted the industrial logic and tangible synergies expected from the merger, emphasizing improved capital allocation and significant financial accretion. Autry C. Stephens, Founder and Chairman of Endeavor, expressed confidence that the merger with Diamondback is the right step for stakeholders, aiming to create value for shareholders.
The combined company will boast around 838,000 net acres and 816 MBOE/d of net production, with an inventory of approximately 6,100 locations with break evens below $40 WTI. Projected annual synergies of $550M are expected to yield over $3.0B in NPV10 over the next decade.
Diamondback also announced a 7% increase in its base dividend to $3.60 per share annually, effective for the fourth quarter of 2023. The company reported higher than expected production for the fourth quarter of 2023 and provided initial production and capital guidance for 2024, signaling a shift in capital allocation philosophy.
Upon closing, Diamondback's Board of Directors will expand to include members from Endeavor's leadership. The merger's financial advisors include Jefferies LLC and Citi for Diamondback, with J.P. Morgan Securities LLC advising Endeavor.
This merger announcement is based on a press release statement and does not constitute financial advice or an endorsement of Diamondback or Endeavor's claims.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.