Energy Companies See Rise in Shares Amid Merger Activity
Shares of energy companies are on the rise as Diamondback Energy and Endeavor Energy Resources announce plans to merge, forming an oil-and-gas giant valued at over $50 billion. This move comes as higher oil prices and a land rush in the Permian Basin continue to drive consolidation within the industry. Notably, Exxon Mobil kickstarted this trend by acquiring both Diamondback and Endeavor's competitor, Pioneer Natural Resources, last year.
"With yet another marriage within the energy sector, love is certainly in the air," says J.D. Joyce, president of Houston financial advisory firm Joyce Wealth Management. Endeavor Energy Resources, a privately-held company founded by Autry Stephens in Midland, Texas, has long been a dominant player in the Permian Basin, controlling sought-after assets in this lucrative U.S. oil patch that stretches across West Texas and New Mexico.
Diamondback, a crosstown rival to Endeavor, has experienced a staggering 50-fold increase in crude oil production since going public in 2012. As news of the merger broke, Diamondback's shares saw a significant spike of approximately 10%. "It's intriguing to witness Diamondback as the acquiring company gaining so much," notes Joyce. "Investors clearly recognize the potential synergies."
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