MIDLAND, Texas — Diamondback Energy, Inc. is making a move that will shake up the oil and gas industry in West Texas, as they will be merging together with Endeavor Energy Resources, L.P. to create a singular oil and gas company.
Two of the bigger independent oil and gas companies in the Permian Basin, the merger is worth approximately $26 billion and will include Endeavor's net debt.
Mergers like this one are becoming an increasing trend, as companies are looking to take advantage of a prosperous Permian Basin that experts believe still has untapped potential.
“We've had several mergers of large oil companies lately and acquisitions of large oil companies, several of them involving resources in the Permian Basin," Ray Perryman, president of The Perryman Group, said. "So you're getting the industry a bit more concentrated.”
The acquisition allows Diamondback and Endeavor to pull together their resources in order to bring in new ideas and new technology, which could lead to more barrels of oil coming out of the Permian Basin.
“When you have larger concentrations, there's more incentive to invest resources into finding and developing those resources into implementing the technologies that make it more efficient in any number of other things that are beneficial," Perryman said. "So on the whole over the long term, you probably are going to see somewhat greater level of production you wouldn’t have otherwise.”
Perryman believes that more oil and gas production is going to be necessary in the future and that more companies like Endeavor and Diamondback will be merging together in the name of efficient production of energy.
“We're going to be needing the shell oil and the shell gas from the low carbon formations in the Permian Basin for decades to come," Perryman said. "So you are seeing people pooling resources and consolidating in order to be more efficient with their resources and recognizing that you don't spend $26 billion on something you're not going to use.”
While it may not have an immediate effect on people working the rigs, this merger would make these two companies one of the largest independent oil companies in this region.
The bigger the company, the more resources at their disposal. Those resources have a good chance of opening up quite a few jobs in the long-term.
“They're both companies that are producing at this point in time they're going to consider these resources will continue to be produced," Perryman said. "They're going to be used throughout the world and needed for for decades to come. I don't think you'll see a lot of impact on the typical worker out there. it's just maybe in some cases, the paycheck maybe coming from a different place.”