Diamondback Energy, Endeavor Energy finalizing merger to create $50 billion company, Wall Street Journal reports

Feb 11 (Reuters) – U.S. shale oil rivals Diamondback Energy (FANG.O), opens new tab and Endeavor Energy Resources are close to finalizing a roughly $25 billion cash-and-stock deal that would create an oil and gas company valued at more than $50 billion, sources said on Sunday.

Diamondback could announce a transaction as soon as Monday that would give its shareholders more than half of the combined companies, the people said.

Endeavor and Diamondback did not immediately respond to a request for comment.

The combined company would be the third largest oil and gas producer in the Permian Basin of West Texas and New Mexico, behind Exxon Mobil (XOM.N), opens new tab and Chevron (CVX.N), opens new tab, which have announced recent deals.

“This is a layup in terms of the acreage overlap and fit,” said Dan Pickering, chief investment officer of Pickering Energy Partners. The combined company would replace Pioneer Natural Resources, which is being acquired by Exxon, as the biggest pure-play Permian producer, he said.

The largest Permian producers are consolidating in a race to lock in future drilling inventory and output from the largest U.S. oilfield. The deal is likely to put additional pressure on the remaining firms to combine for greater efficiencies and scale, analysts said.

Diamondback fended off competition from other parties including ConocoPhillips (COP.N), opens new tab, the Wall Street Journal earlier reported.

Reuters in December reported that Endeavor Energy Partners was exploring a sale that could value the largest privately held oil and gas producer in the Permian basin at between $25 billion and $30 billion.

The sale would come almost 45 years after Texas oilman Autry Stephens started the company that would become Endeavor.

Endeavor’s operations span 350,000 net acres (1,416 square kilometers) in the Midland portion of the Permian shale basin that straddles West Texas and eastern New Mexico.