Oil and natural gas company Diamondback Energy (NASDAQ:FANG) finally confirmed that it will acquire Endeavor Energy Resources for $26 billion, inclusive of Endeavor’s net debt, after speculation over the acquisition. The acquisition is expected to close in the fourth quarter of this year.
The deal comprises around 117.3 million Diamondback shares and $8 billion in cash. The cash component of the transaction will be funded by a combination of cash on hand along with debt from the company’s credit facility, term loans, and senior notes offerings.
After the close of the deal, FANG shareholders are expected to own around 60.5% of the combined company, while Endeavor’s equity holders will own the remaining 39.5%. Diamondback’s management emphasized the combined entity’s extensive and high-quality inventory, which will generate cash flow with the industry’s most competitive cost structure.
On a pro forma basis, in 2025, Diamondback expects to generate oil production in the range of 470 to 480 MBO/d (thousand barrels of oil per day), with a capital budget of between $4.1 billion and $4.4 billion.
Is FANG a Good Buy Now?
Analysts remain bullish about FANG stock with a Strong Buy consensus rating based on 12 Buys and one Hold. Over the past year, FANG has increased by more than 6%, and the average FANG price target of $182.54 implies an upside potential of 20.3% at current levels.
