Diamondback Close to Taking Over Double Eagle.

Diamondback Energy is on track to announce a major acquisition in the Permian this week, boosting its presence there with the takeover of Double Eagle, which could be worth $5 billion.

For Diamondback, this would be the second major deal in a row, after it took over Endeavor Energy Resources last year in a deal with a price tag of $28 billion. That has not benefited the company’s stock, however, as worry about the former owners of Endeavor selling their brand new Diamondback stock prompted an 8% decline in the shares, according to Bloomberg.

The potential deal with Double Eagle, however, is proof that while mergers and acquisitions in the shale patch might be slowing down as targets become scarcer, they are not over yet, especially in the Permian.

According to the Wall Street Journal, Double Eagle has over 95,000 net acres in the most prolific shale play that already accounts for half of the U.S. total in oil production. The private equity-backed company has specialized in accumulating acreage and selling it to bigger players in the E&P space.

Last year, the shale space saw a flurry of mergers and acquisitions, with the total hitting $105 billion. That was substantially lower than the $192 billion in deals struck in 2023 but still a substantial sum. This year, the slowdown is set to continue, according to Enverus but there are still plenty of consolidation opportunities, according to Rystad Energy. The consultancy sees these at $150 billion on a global level, with $80 billion of this available in North America. This makes the continent the leader in M&A activity, with the U.S. still the hotspot.

Source: OILPRICE