The transaction, if it materialises, would see the establishment of an oil and gas company with a market valuation exceeding $50bn.
With the deal, Diamondback shareholders will own the majority of the new entity, which is expected to become the largest pure-play oil producer in the Permian Basin.
Commenting on the latest move, Pickering Energy Partners chief investment officer Dan Pickering said: “This is a layup in terms of the acreage overlap and fit.”
Pickering said that the merged company would supplant Pioneer Natural Resources, which is currently being acquired by Exxon, as the top sole producer in the Permian Basin.
In December 2023, Reuters reported that Endeavor was considering a sale, potentially valuing the privately held oil and gas producer in the Permian Basin at $25bn to $30bn.
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At that time, Autry Stephens, who founded Endeavor some 45 years ago, selected bankers at JPMorgan Chase to prepare for the sale process of the company in the first quarter of 2024.
Employing more than 1,200 people, Endeavor operates in the Midland area of the Permian shale basin, which crosses over into East Texas and West Texas, US.
The company owns approximately 470,000 net acres across multiple basins, inclusive of 344,000 net acres in the Core 6 Midland Basin counties, including Martin, Howard, Midland, and Glasscock, among other counties.
The Core 6 counties are said to be the company’s centre of focus for horizontal drilling operations.