GarlandAg2012 said:
Diamondback and Endeavor merging
Permian Rivals Near Deal to Create $50 Billion Oil-and-Gas Behemoth https://www.wsj.com/articles/permian-rivals-near-deal-to-create-50-billion-oil-and-gas-behemoth-18893919
Approximate overlay of Diamondback and Endeavor acreage in Midland Basin (Generated via NASA 200 IQ tier AI only understood by @HiddenOG) $FANG pic.twitter.com/cj1OXW3xfH
— Rock Creek Freak (@rockcreekfreak) February 11, 2024
AgLA06 said:
I wish someone (maybe there is) would go back and be able to report on actual realized "synergies" after these things close and are fully merged to see how they fare compared to projections before the merger.
Being across the street doesn't necessarily make things easier or cheaper if you can't unload the excess. Especially if there's no one else in town that would want the empty building after layoffs from the merger because the 2 biggest players just left it empty.
I'm not saying it a good merger. I just find it hard to buy what they're pitching having gone through a similar merger and been on a team that had to consolidate facilities and operations after the fact. The costs to do so are quite expensive.
AgLA06 said:
I wish someone (maybe there is) would go back and be able to report on actual realized "synergies" after these things close and are fully merged to see how they fare compared to projections before the merger.
Being across the street doesn't necessarily make things easier or cheaper if you can't unload the excess. Especially if there's no one else in town that would want the empty building after layoffs from the merger because the 2 biggest players just left it empty.
I'm not saying it not a good merger. I just find it hard to buy what they're pitching as savings having gone through a similar merger and been on a team that had to consolidate facilities and operations after the fact. The costs to do so in money and people are quite expensive.
one MEEN Ag said:
There's pretty ironclad management requirements per profit producing worker. Every x employees needs another HR rep, team lead, project manager, field manager, etc. So there isn't many workforce synergies, especially for teams that have survived shale downturns, to go after. Headcount has been cut to the bone the past decade.
I would guess the total headcount reduction would be on the order of 5-10% of the acquired company and even then expect half of those roles to be added back in 24 months later.
The real gains is just land, but even then, you can't buy a company and then turn their wells off. Companies do just the opposite to pay for the acquisition. If two companies with 10 years of inventory merge, you still only have 10 years of inventory at the now 2x sized company.
I think diamondback has a model for managing their FCF against their debt and costs, and they're about to add 26 billion against their liabilities. The only real options are drill now or drill later, and drilling later doesn't help pay the bills now. The only real reason diamondback would make 'minimum payments' on the endeavour debt, only producing enough to cover costs, instead of producing FCF now would be to hold back inventory for their own sale one day.Boat Shoes said:one MEEN Ag said:
There's pretty ironclad management requirements per profit producing worker. Every x employees needs another HR rep, team lead, project manager, field manager, etc. So there isn't many workforce synergies, especially for teams that have survived shale downturns, to go after. Headcount has been cut to the bone the past decade.
I would guess the total headcount reduction would be on the order of 5-10% of the acquired company and even then expect half of those roles to be added back in 24 months later.
The real gains is just land, but even then, you can't buy a company and then turn their wells off. Companies do just the opposite to pay for the acquisition. If two companies with 10 years of inventory merge, you still only have 10 years of inventory at the now 2x sized company.
That assumes the total rig count between the two companies remains flat. You dont think theyll drop any activity?
I agree. You'll lose some execs, middle managers, and 5%-20% of the doers as they merge teams. Whether they are let go or leave to avoid the circus of a merger. Not to mention retention bonus costs to try and avoid that.one MEEN Ag said:
There's pretty ironclad management requirements per profit producing worker. Every x employees needs another HR rep, team lead, project manager, field manager, etc. So there isn't many workforce synergies, especially for teams that have survived shale downturns, to go after. Headcount has been cut to the bone the past decade.
I would guess the total headcount reduction would be on the order of 5-10% of the acquired company and even then expect half of those roles to be added back in 24 months later.
The real gains is just land, but even then, you can't buy a company and then turn their wells off. Companies do just the opposite to pay for the acquisition. If two companies with 10 years of inventory merge, you still only have 10 years of inventory at the now 2x sized company.
one MEEN Ag said:
There's pretty ironclad management requirements per profit producing worker. Every x employees needs another HR rep, team lead, project manager, field manager, etc. So there isn't many workforce synergies, especially for teams that have survived shale downturns, to go after. Headcount has been cut to the bone the past decade.
I would guess the total headcount reduction would be on the order of 5-10% of the acquired company and even then expect half of those roles to be added back in 24 months later.
The real gains is just land, but even then, you can't buy a company and then turn their wells off. Companies do just the opposite to pay for the acquisition. If two companies with 10 years of inventory merge, you still only have 10 years of inventory at the now 2x sized company.
Alright, I'm not brave enough to have bought KOLD and play NG all the way down. But I'm starting to get a bit interested in buying BOIL.Ag CPA said:
NYMEX nat gas flirting with the COVID low today.
