According to insiders familiar with the matter, Diamondback Energy Inc. is on the brink of securing a deal to acquire the West Texas oil producer Double Eagle, aiming to bolster its dominance in the world’s largest shale region.
Diamondback, which stands as the leading independent oil and gas force in the Permian Basin, is expected to make the official announcement about acquiring Double Eagle as soon as Tuesday morning. The value of this deal might exceed $5 billion, according to a report by the Wall Street Journal, which cited anonymous sources.
As of now, representatives from Diamondback have not responded to requests for comment, while those from Double Eagle have declined to say anything further.
This potential acquisition arises nearly a year after Diamondback completed its largest transaction to date—the acquisition of Endeavor Energy Resources LP, valued at approximately $28 billion in September. This deal, however, has placed Diamondback among the S&P 500 Energy Index’s worst performers, amid rumors that the family of Endeavor’s founder, Autry Stephens, might sell more shares acquired through the deal.
Shale industry observers anticipated a slowdown in deals after a two-year spate of $300 billion in acquisitions consolidated many targets, noted Enverus, an industry consulting firm.
Double Eagle, backed by private equity investors including EnCap Investments LP, is among the last major privately held producers remaining to be acquired in the Permian Basin, which spans regions of West Texas and southeastern New Mexico.
Private producers, once pivotal to shale growth, are now seeing slower output expansion as private equity firms exit the sector. Between 2010 and 2019, these firms raised an average of $21 billion annually in energy investments, but this figure has sharply declined, now averaging about $6 billion a year, according to Quantum Capital Group LLC.
