Diamondback Energy Inc. has agreed to buy privately held Texas oil-and-gas producer Endeavor Energy Resources LP for $26 billion in cash and stock, including debt, creating the Permian Basin’s third largest oil producer behind Exxon and Chevron. It would also be the largest oil production operating alone in the Permian.

The combined market value would be a little more than $50 billion

The transaction will be funded by approximately 117.3 million Diamondback shares and $8 billion in cash. Diamonbacks’ current shareholders are anticipated to own around 60.5% of the combined company, while Endeavor’s stockholders will own approximately 39.5%.

The cash component is expected to be funded by a combination of cash on hand and bridge financing from Citi, which is also leading the term loan and senior notes offers.

“I am grateful to the Endeavor team and proud of what we have built since 1979,” said Autry C. Stephens, founder and chairman of the board of Endeavor. “We believe Diamondback is the right partner for Endeavor, our employees, families and communities. Together we will create value for shareholders and our other stakeholders.”

The combined company would produce 816,000 barrels of oil equivalent per day (boepd) and generate $550 million in annual synergies, totaling more than $3 billion in net value over the next decade, the companies noted.

There have been huge energy deals in recent months, including Chevron’s $53 billion acquisition of Hess in October and Exxon Mobil’s $59.5 billion deal two weeks earlier, its largest acquisition since purchasing Mobil two decades ago.

The Diamondback-Endeavor merger is expected to close in the fourth quarter of 2024.