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Report: Shell in initial talks to buy Endeavor Energy for $8B

Oil major Royal Dutch Shell PLC is in talks to buy Texas-based oil producer Endeavor Energy Resources LP for about $8 billion, according to a Dec. 17 article from Bloomberg, citing people familiar with the matter.

Exxon Mobil Corp., Chevron Corp., and ConocoPhillips had all also been considering making a play for Endeavor, but their interest has reportedly fizzled.

Talks with Shell are said to be in the beginning stages since Endeavor founder Autry Stephens hopes to keep a large amount of mineral rights as part of a deal, Bloomberg said, which has lowered the price to $8 billion.

Including debt, Endeavor, which holds more than 300,000 acres of mostly undeveloped land in the Permian, was pegged previously by analysts to be valued anywhere from $12 billion to $15 billion. The company's core acres are located in Martin, Midland, Upton, Glasscock, Reagan and Howard counties. Net production in the second quarter was 64,000 barrels of oil equivalent per day, 75% of which was oil.

Endeavor, which is family owned, agreed to explore a sale after receiving inquiries from prospective bidders, although the family would prefer an IPO next year so it could retain control.

In a bid to transform its existing fleet, Shell is nearing the completion of its two-year plan to divest $30 billion in assets through the end of this year to pay down debt following its purchase of BG Group PLC several years ago.

"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. We do not however comment on current or potential commercial actions or agreements," a Shell spokeswoman said in a Dec. 18 email.

According to Shell, it first entered the Permian Basin in 2012 in partnership with Anadarko Petroleum Corp. and now has operations covering around 280,000 net acres.

In its monthly Drilling Productivity Report, the Energy Information Administration expects oil production from the Permian Basin in December will top 3.7 million barrels per day, with output to exceed 3.8 MM bbl/d in January 2019 for the first time ever.

Should a sale of Endeavor occur, it would follow a rash of Permian-centered transactions this year, including Concho Resources Inc.'s purchase of RSP Permian for $9.5 billion and Diamondback Energy Inc.'s purchase of Energen Corp. for $9.2 billion. Additionally, on Oct. 31, BP PLC closed on its $10.5 billion acquisition of BHP Billiton Group's U.S. shale oil and natural gas assets.

A spokesman from Endeavor had no comment on Shell's potential purchase of the company.