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Diamondback Energy, Endeavor Energy Resources announce $26B deal

Shares of Diamondback Energy (FANG) are climbing Monday morning following the announcement of a merger agreement with Endeavor Energy Resources, the latest acquisition deal to hit the energy sector. Diamondback plans to acquire Endeavor in an all-stock deal valued at $26 billion.

The merger will make Diamondback one of the largest independent oil and gas producers in the Permian Basin.

Yahoo Finance's Senior Business Reporter Ines Ferré breaks down the details.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video transcript

- Now this is the latest in a slew of deals for the energy space. Yahoo Finance's Ines Ferre has the details. Ines, what are you watching?

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INES FERRE: Yeah, Rachelle, and I've been watching Diamondback Energy. The stock is down more than 1%. But look, the company announcing that it is going to acquire Endeavor for $26 billion. This is the latest really in a slew of consolidation moves, especially when it comes to the US Permian Basin.

This is a $26 billion merger in a cash and stock deal. Just to give you a little background, Diamondback Energy was founded back in 2007. It started to trade publicly in 2012. Its market cap is around $27 billion. Endeavor dates back all the way to 1979.

It became Endeavor back in 2000. And it is a privately held operator. And, in fact, both of these companies are headquartered pretty much across from each other in Midland, right across the street from each other in Midland. That is basically the heartland of the Permian Basin.

And it's important we're talking a lot about the Permian Basin over the last year because we have seen these deals. We've seen ExxonMobil acquiring Pioneer. We've seen Chevron announcing that it's going to be acquiring Hess, Occidental with CrownRock. And the Permian Basin has traditionally been more fragmented.

But now, it's becoming this consolidated space as companies are securing sites for the future. They're securing-- they're drilling sites. And it's an area that has had a lot of technological advances. So it's much more efficient drilling, and it's much more cost effective. And these are big players now that are coming to the forefront as we have seen this string of consolidations.

- Yeah, Ines, and in all of these consolidations, they're talking about what the synergies are. Is it clear when some of those expectations, when they're talking about capital allocation, and land synergies, and operating cost synergies, when that's expected to come to fruition?

INES FERRE: Yeah, look, I mean, this is going to be closing in the fourth quarter as far as this deal is concerned. But just to give you an idea of the combined-- when you're combining these two companies that are-- is now going to be valued at around a $50 billion company, it's going to be substantial.

They're going to be producing 816,000 barrels of oil and gas a day and a total of 838,000 acres of Permian land. So it's substantial. I mean, you are starting to see a lot of these bigger players going after these smaller players, gobbling them up.

- Indeed, very lucrative. I believe it's the world's most productive oil field there in the Permian Basin. Appreciate you getting us up to speed, our very own Ines Ferre.