With a career spanning over six decades, Stephens has held various roles in the oil sector, ranging from trucker to driller to engineer. Now, he stands on the brink of becoming America’s wealthiest oil magnate.
Diamondback Energy Inc. has reached an agreement to acquire Stephens’s Endeavor Energy Resources LP for $26 billion in cash and stock. This acquisition would propel Stephens from 130th to 64th place on the Bloomberg Billionaires Index, solidifying his position as the wealthiest oil driller in the country with a net worth of $25.9 billion, based on the current Diamondback share price.
With a fortune of this magnitude, Stephens would surpass the net worth of Harold Hamm from Continental Resources Inc., valued at $15.4 billion, and Jeff Hildebrand from Hilcorp Energy, whose net worth stands at $17 billion. Although Charles and Julia Koch, the owners of conglomerate Koch Industries, are wealthier, oil constitutes only a portion of their diversified wealth. The completion of the Endeavor sale is anticipated in the fourth quarter.
The agreement puts an end to years of speculation regarding the potential buyer for Endeavor, one of the few remaining privately held major producers in the shale-rich Permian region. Autry Stephens, aged 85 and hailing from a family of peanut and melon farmers, established the company in Midland, Texas, in 1979. Before this venture, he had worked for Humble Oil, now part of Exxon Mobil Corp., and had stints with the Army Corps of Engineers and a Midland bank as an oil and gas appraiser.
Initially, Stephens’ fledgling business primarily provided ad-hoc engineering assistance. Over time, it diversified to encompass trucking, well services, and roustabout construction. One constant throughout was Stephens’ strategy of acquiring drilling rights in Texas and holding onto them without selling. Shortly after departing from the bank, Stephens acquired his first Permian rights and persisted in this approach even as production declined during the 1980s and 1990s, when major oil companies sought more lucrative opportunities overseas.
Stephens’ preference for using cash rather than debt to acquire drilling rights proved crucial during the 2008 financial crisis, a period marked by a significant downturn in oil demand that led to the bankruptcy of several US operators. As a result of the crisis, Stephens had to cease operations for almost all of his rigs. However, his strategy paid dividends when oil prices surged back to over $100 a barrel shortly thereafter.
The game-changer for the US oil industry came with the advancement of horizontal drilling and hydraulic fracturing, technologies that greatly enhanced the sector’s prospects. Stephens found himself in an advantageous position to capitalize on these innovations. Over time, he amassed drilling rights to an impressive 344,000 acres, an area approximately 400 times the size of Central Park, situated at the heart of the Permian Basin.
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