Why Endeavor Energy's founder sold his company after years of rebuffing
offers
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[February 13, 2024] By
Liz Hampton, Arathy Somasekhar and David French
(Reuters) - For years, Endeavor Energy founder Autry Stephens' refusal
to entertain acquisition offers for one of the most lucrative producers
in the U.S. oil patch vexed some of his peers.
"It's not for sale, it hasn't been for sale, it's probably not going to
ever sell," Pioneer Natural Resources' former CEO Scott Sheffield, a
contemporary of Stephens, told a Barclays energy conference in 2021
about his interest in buying Endeavor.
On Monday, Stephens agreed to sell the company for $26 billion in cash
and stock to Diamondback Energy, another oil and gas producer which,
like Endeavor, hails from Midland, Texas, and operates in the Permian
basin, the most productive U.S. oilfield.
Stephens, who launched Endeavor in 1979 and grew it by snapping up
tough-to-drill wells that oil majors snubbed, rebuffed several offers
over the years for the company, arguing there was still room to grow it,
according to industry executives and investment bankers familiar with
the approaches.
The 85-year-old wildcatter's decision to sell came after he was
diagnosed with cancer, according to three people who discussed his
health with him. One of them, Texas oil businessman Javaid Anwar, said
he uses his private plane to fly Stephens to Houston for treatment.
With the wealth of his wife and his two children tied to Endeavor,
Stephens moved to settle the company's future rather than let his estate
decide on a sale after his death, according to three investment banking
sources. In a discussion that one of his friends conveyed to Reuters,
Stephens expressed satisfaction with the deal's financial outcome but
regret that he could not carry on because of his health.
A spokesperson for Endeavor declined to comment on Stephens' health or
make Stephens available for an interview.
Stephens had hoped for a wide auction process that would attract major
players including Exxon Mobil, Chevron Corp and Occidental Petroleum,
according to the three banking sources. He went ahead even though those
three companies were in the midst of completing major acquisitions inked
in the last three months, the sources said.
A spokesperson for Occidental declined to comment, while spokespeople
for Exxon and Chevron could not be immediately reached for comment.
A source close to Diamondback said it approached Stephens shortly after
Reuters reported on Dec. 8 that Endeavor was preparing to launch a sale
process with help from JPMorgan Chase bankers.
FRUGAL AND DRIVEN
Interviews with over 15 oil and gas executives, investment bankers and
friends of Stephens paint a picture of an entrepreneur whose relentless
work ethic and frugality have changed little since he became one of the
richest people in Texas.
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A pumpjack is shown outside Midland-Odessa area in the Permian basin
in Texas, U.S., July 17, 2018. Image taken July 17, 2018.
REUTERS/Liz Hampton/File Photo
He regularly works weekends, has stuck with a decades-old car, and
usually travels economy on commercial flights. One of his favorite
restaurants is El Banquete, a low key Mexican restaurant on the
south side of Midland where a breakfast burrito costs about $5, one
of his friends said.
Those who know Stephens say he was shaped by years of austerity in
the 1980s and 1990s, when he went through tough spells to get
Endeavor off the ground.
"He bootstraps his way," said investor Dan Pickering of financial
services firm Pickering Energy Partners, who has done business with
Stephens.
Born in 1938, Stephens grew up on a farm in DeLeon, Texas, where his
family grew peanuts and produce. He studied engineering, despite
coming into college behind in math, according to a profile on the
University of Texas' engineering school website.
Stephens drilled his first well in 1979 in Midland county. He would
pick up leaseholds for acreage that oil majors found too expensive
to drill and would lower production costs by handling most of the
operations. He created and used his own fracking, construction and
trucking companies.
"He is the hardest worker probably in our industry," said Bryan
Sheffield, son of Scott Sheffield and founder of shale firm Parsley
Energy.
Chuck Meloy, a former Anadarko Petroleum executive who Stephens
tapped to serve as Endeavor CEO between 2016 and 2020, helped
modernize Endeavor, convincing Stephens to spend more on salaries
and bonuses, two of the people who know them said.
Stephens' wife Linda and his daughter Lyndal are in the family
business. LinkedIn lists Linda Stephens as an owner of Endeavor,
though two people - a friend and a fellow Midland businessman - said
she is not involved in day-to-day operations. Lyndal Stephens Greth,
an attorney, serves as vice chair of Endeavor's board.
Stephens' son, Joseph Martin, is not involved in Endeavor. He was
pardoned by former U.S. President Donald Trump in 2020 for a felony
gun charge that he pleaded guilty to in 2008, according to a White
House statement and criminal records.
Linda Stephens, Lyndal and Joseph did not immediately respond to
requests for comment.
(Reporting by Liz Hampton in Denver, Arathy Somasekhar in Houston
and David French in New York; Editing by Greg Roumeliotis and Sonali
Paul)
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