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Shell is in talks to acquire Endeavor Energy Resources for US$8 billion, Bloomberg reports, citing sources close to the negotiations. Earlier, Shell was not the only suitor, with Exxon, Conoco, and Chevron also reportedly interested in the acquisition but not enough to pursue it.
The value of the deal Bloomberg’s sources mentioned is half the sum Endeavor was believed to be able to score when it announced earlier this year that it was selling. The talks with Shell are still at an early stage, and it is uncertain whether a deal will be agreed, especially since the founder of Endeavor, Autry Stephens, has insisted that he keeps a substantial part of the company’s mineral rights after the sale, if a sale takes place.
Shell neither confirmed nor denied the talks. “Portfolio review is an ongoing process to ensure we have the right mix of assets to deliver maximum value to our shareholders while delivering on our business strategy," it wrote to Bloomberg as a response for a request for a comment. "We do not, however, comment on current or potential commercial actions or agreements.”
The first reports of an Endeavor sale emerged in late October, in the Wall Street Journal. Reuters wrote at the time the Midland-based energy independent eyed proceeds of more than US$10 billion, citing unnamed sources. The company had hired Goldman Sachs and JP Morgan to arrange the deal, the sources also said.
This year has already seen two big-size acquisition in the star play of the U.S. shale patch, the Permian: first Concho Resources’ US$8-billion purchase of RSP Permian and Diamondback Energy’s takeover for US$2.9 billion of Energen Group.
The supermajors have also been expanding in the Permian, most commonly through acreage purchases but also through acquisitions as the availability of land up for grabs declines with the surge of activity in the play. If Shell reaches a deal, it will add 300,000 net acres to its portfolio and daily production of 64,000 bpd as of the end of the second quarter of the year.
By Irina Slav Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.