The following blog is distilled from Intelligence® Research (EIR) publications and EIR’s very own Andrew Dittmar’s media statements on the Diamondback acquisition.
With U.S. upstream M&A reaching $105 billion in 2024—the third highest as recorded by Enverus—the market shows no signs of slowing down, with high price tag deals being driven by the scarcity of high-quality inventory. Kicking off the first large Permian deal of 2025, Diamondback Energy acquired part of the assets of Double Eagle IV for $4.1 billion. Diamondback is one of the largest players in the Permian Basin, second only to Exxon Mobil, based on gross operated oil volumes.[1]
A high price for an asset in the Permian is no surprise, as high-quality inventory is scarce. Although the recent Diamondback deal sets a new benchmark at $7 million per location, exceeding a comparable 2023 Permian deal of OXY’s CrownRock acquisition at $4.8 million per location.[2] Andrew Dittmar from the Enverus Intelligence® Research Team has state that this recent deal is pivotal because it represents one of the last remaining opportunities for a large, high-quality asset to be acquired from a willing seller.[1]
In order for private and mid-sized operators to stay competitive in today’s market, operators should explore opportunities in less consolidated basins, consider joint ventures or position themselves as attractive acquisition targets.
While building a new position in the Permian is challenging, it can be done, and the Double Eagle team has been as effective as, or even more effective than anyone in consistently building new positions and selling them at premium prices.
– Andrew Dittmar, Principal Analyst – Enverus Intelligence® Research[1]
How This Deal Affects Mid-Size Operators
1. Increased consolidation pressure: The $4.1 billion deal represents one of the last significant private positions in the Midland Basin and leaves very few remaining opportunities for mid-sized operators to acquire high-quality inventory.[1] The Enverus Intelligence® Research (EIR) analysts have highlighted that the large price tag could set a new benchmark, making acquisitions much more expensive for smaller players.[2]
2. Inventory access challenges: High-quality undeveloped acreage is becoming increasingly concentrated in the portfolios of large industry giants, while the remaining private companies with quality inventory (like Fasken Oil & Ranch and Mewbourne Oil) are family-owned and may not be interested in selling.[1]
3. Operational implications: There is increasing evidence of public companies valuing inventory over current production volumes, which creates challenges for private equity-backed portfolio companies operating outside the Permian and puts pressure on them to adopt new strategies.[2]
Learn how Enverus can help you uncover undrilled upside and assess remaining inventory accurately.
Top Five Strategies for Operators to Get Ahead in the Competitive M&A Market
Since 2020, there’s been a wave of consolidation in the Permian with nearly $90 billion in private assets being acquired by public companies.[3] The competitive dynamics may have changed, but there are strategies operators can apply to get a competitive edge, such as:
- Focusing on operational efficiency and development of existing assets. Enverus Intelligence® Research (EIR) analysts highlight that in the last two years, capital efficiency has become a key focus for investors when it comes to evaluating assets.[4] Companies with stronger operational efficiency metrics are commanding higher trading multiples [4] and mid-sized operators are facing increasing pressure to improve capital efficiency as inventory quality becomes more scrutinized.[5]
- Look for opportunities in less consolidated areas or other basins. Operators can turn to resource expansion opportunities that exist outside of core shale basins.[6] Legacy plays in the Mid-Continent and Rockies present viable targets that have been largely out of focus by the larger public players.[7]
- Acquire gas assets. Rising prices driven by LNG exports and data center demand have pushed some players to turn towards gas, with the value of gas-focused M&A increasing four times in 2024 compared to 2023. As LNG demand is expected to continue to grow, the current market presents an opportunity for mid-size operators to capitalize on this and acquire gas assets in anticipation of the demand growth.
- Consider joint ventures or partnerships as an alternative to acquisitions. There are many benefits to considering a partnership, including gaining access to diverse expertise and complementing one another’s technological and operational experience. By sharing financials, you also share the risk, allowing you to test new opportunities at a lower entry cost, including large opportunities that you may have not considered otherwise.[8]
- Potentially become acquisition targets themselves as larger players continue to consolidate the basin. Operators need to put themselves in the investors’ shoes, gaining insight into how the market is valuing their asset and whether it would be worth more in a buyer’s hands. Solutions like Enverus Inventory Suite can be used by operators to quickly and accurately screen potential deals on the buy- or sell-side.
Conclusion
Enverus Intelligence® Research (EIR) believes that as consolidation reshapes the Permian Basin, operators must adapt their M&A strategies to remain competitive in a landscape where high-quality inventory is increasingly controlled by industry giants. Strategic approaches such as improving capital efficiency, turning towards natural gas, exploring less consolidated basins and leveraging partnerships can provide a path forward. By proactively positioning themselves for success—whether as acquirers or attractive acquisition targets—operators can navigate the evolving M&A market and secure their place in the future of U.S. upstream.
Smarter M&A Decisions Start Here
In such an active M&A market, getting a handle on the right assets to develop can be a challenge. Traditional M&A evaluations take time and may rely on outdated inventory assumptions, making it difficult to assess asset value accurately.
Watch now as Enverus E&P Segment Leader Jeb Burleson highlights how BD, A&D and M&A teams are using Enverus Inventory Solutions to:
- Screen, benchmark and validate assets with the most comprehensive inventory insights available.
- Stay up to date on changing market trends and what it could mean for the industry.
- Uncover undrilled upside and assess remaining inventory beyond simple acreage math.
- Optimize deal economics with customizable scenario modeling and forecasting.
- Standardize valuations using third-party validated analytics that investors trust.
Tune in to learn how you can be competitive in this fast-paced energy landscape.
Ready to uncover inventory insights and enhance your M&A strategy? Fill out the form below to learn more:
About Enverus Intelligence® | Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts, and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. See additional disclosures here.
References:
You must be a subscriber to Enverus Intelligence® | Research (EIR) products to view sources 2-8. To learn more, click here.
[2] FANG Spends $4.1 B on Midland Assets | [Double] Eagle’s Winning Legacy [Page1-3] (2025-02-19)
[3] Permian pricing soars to new heights with Double Eagle deal (2025-02-24)
[4] SMID-Cap Oil 4Q22 NAV Compass | Cheap Multiples in Search of Inventory [Page 1] (2023-04-20)
[5] Large-Cap Oil 4Q22 NAV Compass | Bullish Undeveloped Sections and Gas Hybrid E&Ps [Page 1] (2023-04-20)
[6] Secondary Basin Well Watching | The Best of the Rest [Page 2] (2024-10-02)
[7] Inventory Pricing Accelerates Higher [Page 9] (2024-07-29)
[8] Subsurface Innovation 3Q23 | Mergers, Alliances and Investments Unearthed [Page 4] (2023-10-18)
