NYREADERS.COM – Two Texas' large oil producers Diamondback Energy, Inc. (NASDAQ: FANG) and Endeavor Energy Resources, L.P. announced their plan on Tuesday to merge with a transaction valued US$26 billion.
The combination will create a premier Permian independent operator, Diamondback Energy said in a statement.
The transaction consideration will consist of approximately 117.3 million shares of Diamondback common stock and $8 billion of cash, subject to customary adjustments.
The cash portion of the consideration is expected to be funded through a combination of cash on hand, borrowings under the Company’s credit facility and/or proceeds from term loans and senior notes offerings.
As a result of the transaction, the company’s existing stockholders are expected to own approximately 60.5% of the combined company and Endeavor’s equity holders are expected to own approximately 39.5% of the combined company, Diamondback said in a statement.
The transaction was unanimously approved by the Board of Directors of the company and has all necessary Endeavor approvals.
“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,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback.
“This combination meets all the required criteria for a successful combination: sound industrial logic with tangible synergies, improved combined capital allocation and significant near and long-term financial accretion. With this combination, Diamondback not only gets bigger, it gets better,” Travis Stice said.
Stice said the two 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,” he said.
Autry C. Stephens, Founder and Chairman of the Board of Endeavor said that he believes Diamondback is the right partner for Endeavor. “Together we will create value for shareholders and our other stakeholders.”
“As we look toward the future, we are confident joining with Diamondback is a transformational opportunity for us,” said Lance Robertson, President and Chief Executive Officer of Endeavor.
“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,” Robertson said.
Strategic and Financial Benefits