Diamondback Energy to buy Endeavor in $26 billion deal to create a Permian drilling giant

Diamondback Energy will buy rival Endeavor Energy Resources in a cash-and-stock deal valued at about $26 billion to create a drilling giant in the Southwest United States.

Growing confidence in an economic recovery, particularly in the U.S., is driving massive deals in the energy sector in recent months, including a Chevron’s $53 billion acquisition of Hess, and a $59.5 billion deal two weeks before that by Exxon Mobil, its biggest acquisition since buying Mobil two decades ago.

The combined company will oversee 838,000 acres and can produce 816,000 oil-equivalent barrels each day.

The Diamondback, Endeavor deal confirmed Monday includes approximately 117.3 million shares of Diamondback common stock and $8 billion in cash, and will create a huge operator in the Permian Basin that straddles Texas and New Mexico.

“Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last twelve years, and this combination allows us to bring this cost structure to a larger asset and allocate capital to a stronger pro forma inventory position,” Diamondback Chairman and CEO Travis Stice said in a prepared statement.

Shareholders of Diamondback Energy Inc. are expected to own about 60...