Many big oil companies have tried and failed over the years to wrest 86-year-old Wildcat Autry Stevens from managing his 340,000-acre oil fields in West Texas. That's where his Endeavor Energy Resources has done his more than 1,100 drilling and hydraulic fracturing operations, from which he produces 400,000 barrels of oil per day.
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But Stevens didn't sell. His tenacity to not only build Midland-based Endeavor from the ground up, but also to see it through the ups and downs, such as the “near-death experience” of getting too much in debt and watching oil prices collapse. but earned him a no rating. . Last year's Forbes 400 list ranked him 45th, and his estimated wealth is $14.8 billion.
It turns out that was a conservative estimate.Stevens finally sells Endeavor to Diamondback Energy in $26 billion deal
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The Diamondbacks may be smaller than some of Stevens' other suitors, but they're getting it in key spots. Both companies are headquartered in Midland and share similar corporate cultures. His two companies are the largest drilling operators in the Permian, each operating more than a dozen rigs. And the land is a natural fit. Many of the two companies' large sites are directly adjacent to each other. They call this a merger. FANG's existing shareholders will control 60% of the company and Endeavor Group will control 40%.
The new Diamondback will continue to be led by Chairman Travis Stith, 61, who has more than tripled the company's value since its 2012 IPO. A Texas A&M graduate, his Stice studied business at Mobil Oil, Burlington Resources, Apache Corp and Laredo Petroleum.
Endeavor's metrics seem reasonable. According to TD Cowen
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It was unclear from Diamondback's filing with the SEC this morning how much net debt it would take on from Endeavor. Diamondback has about $10 billion in long-term debt and other debt, according to its most recent quarterly report. The company expects $550 million a year in synergies and cost savings, and plans to quickly pay down debt while increasing dividends and investing $5 billion a year in drilling. Estimated production will be 800,000 barrels per day.
For Stevens, this deal marks the culmination of an incredible contrarian success story and years of pursuing real estate planning. Stevens grew up on a farm in Texas and went on to attend the University of Texas. He entered the industry at Humble Oil (now Exxon) and later became a consultant for banks valuing oil assets. In 1979, he put his savings into buying a rig and drilling his first oil well in the Sprayberry field in Midland County.
Stevens goes back to a time when the industry was still drilling vertical wells vertically into conventional oil-bearing rock formations, as the industry had done for decades in the Permian Basin of West Texas. But in the 1980s and his '90s, the area fell out of favor with big oil, and companies sold off vast old oil fields, allowing people like Stevens to acquire large tracts of land at discounted prices. I did. The biggest land deal, which Stevens has previously described as a “coup,” was in 2005 when French independent oil company Perenco (now owned by the billionaire family of its late founder Hubert Perraud) acquired the U.S. It was an asset purchase. French people, models and their $10 billion oil fortune).
Stevens' inquisitiveness was rewarded with the advent of the horizontal drilling revolution. In this revolution, oil operators perfected the art of not only driving vertical wells into the ground like straws, but also steering the drill bit horizontally to traverse thin layers of oil-soaked shale. It reaches two miles underground and applies hydraulic fracturing there. In other words, water mixed with sand is injected at high pressure to crack open the shale and release the oil. Stevens suddenly realized that his land was the best place in the world to apply these new technologies. He could have sold everything at the time, but instead Stevens chose to go it alone.
And soon his company encountered what he said forbes Ten years ago, it was a “near-death experience.” He had borrowed billions of dollars to fund drilling, but when the price of his oil fell, Mr. Stevens was on the verge of bankruptcy. He quickly entered into a joint venture with Exxon to pay for drilling on Endeavor's land, allowing Stevens to reduce his debt.
This agreement will further consolidate the North American oil industry. In recent months, we've seen Exxon/Pioneer and Chevron.
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When the dust settles, Diamondback will compete with EOG Resources, Occidental and ConocoPhillips as the S&P 500's most valuable independent oil company. Diamondback is already rolling out a new pitch to investors: a “must-have pure play in the Permian Basin.”