The largest privately held E&P in the Midland Basin agreed to hand over the keys to its vast portfolio after 66 days of essentially just data-checking, according to a U.S. Securities and Exchange Commission (SEC) filing.
The $26 billion deal will create an 816,000 net boe/d Permian Basin producer upon closing, combining Endeavor Energy Resources’ average of 353,000 boe/d with Diamondback Energy’s average of 463,000 boe/d. Combined, the pair will have 838,000 net acres, with each company’s leasehold contributing roughly 50-50.
Talks began on Dec. 8 with a phone call from Travis Stice, Diamondback chairman and CEO, to Endeavor CEO Lance Robertson, according to a Diamondback March 19 SEC filing.
Later that day, Stice sent an e-document on a journey that, by foot, would have been a 285-step walk around the corner of West Texas Avenue and North Marienfeld Street to Endeavor’s office. The document was addressed to Endeavor owner Autry Stephens, who founded the company in 1979 with some savings, some land and, soon, a first well, McClintic B-30 #2 in Midland County.
Operating at first as “Autry C. Stephens” in Texas Railroad Commission (RRC) files back when Texas lease numbers were just four digits (today, they’re as many as six), Stephens named the company Endeavor in 2000. That first well was still producing through 2015 until it was plugged, according to the RRC.
In the Dec. 8 letter, Stice “ascribed a value of at least $25 billion to Endeavor, based on preliminary analysis using publicly available information,” Diamondback reported in the filing.
Diamondback had activated M&A adviser Jefferies LLC in November to come up with a purchase price, it added.
Hart Energy reported Nov. 14 that Endeavor could be worth up to $30 billion, based on newly available production data and the value Exxon Mobil had placed on Pioneer Natural Resources, also a Midland pure-play. That $59.5 billion deal was announced in October.
Endeavor gave Diamondback the password to its virtual data room on Dec. 21.
Diamondback was done in 15 business days.
Stice delivered a letter on Jan. 12 to Robertson, offering $10 billion in cash, $16 billion in Diamondback common stock and two board seats.
A couple of weeks later, it gave Endeavor the password to its own virtual data room.
Three days later, Robertson asked for four board seats and the option that the equity portion could be non-voting preferred Diamondback stock. Also, he offered a 3.5% termination fee payable by either party.
Kaes Van’t Hof, Diamondback president and CFO, replied on Jan. 31 that four board seats would be fine.
The following week, Endeavor and Diamondback agreed that there wouldn’t be preferred stock but the $26 billion would consist of $8 billion in cash and $18 billion in common stock.
The deal was signed Feb. 11.
Stephens, who is reported to be experiencing health concerns, said in the announcement Feb. 12, “I am grateful to the Endeavor team and proud of what we have built since 1979.
“We believe Diamondback is the right partner for Endeavor, our employees, families and communities. Together we will create value for shareholders and our other stakeholders.”
Diamondback shareholder approval and Federal Trade Commission antitrust clearance are expected before year-end.