Shell in negotiations to buy Permian-focused Endeavor Energy

Shell is reportedly in discussions to acquire US oil exploration and production firm Endeavor Energy Resources.

The takeover could be valued at around $8bn, roughly half as much as the $15bn initial valuation of Endeavor earlier this year, Bloomberg reported citing unnamed sources.

Other oil and gas companies also previously considering acquiring Endeavor include Exxon Mobil, Chevron, and ConocoPhillips. However, their interest in the takeover has reportedly waned, the sources added.

Shell is likely to face challenges in the negotiations as Endeavor founder Autry Stephens intends to retain control over a large quantity of the company’s mineral rights or ownership of untapped oil, according to one of the sources.

The complicated situation has caused the valuation of Endeavor to effectively halve.

Last month, sources told Bloomberg that Endeavor is also considering going public next year.

An unidentified Shell representative was quoted by the publication as saying: “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.”

Endeavor holds more than 300,000 acres in the Permian Basin of Texas and New Mexico.

In October, Reuters reported that the company hired JP Morgan Chase & Co and Goldman Sachs Group to arrange the potential sale.

Shell operates in the Permian through a joint venture with Anadarko Petroleum.  The Permian basin is a major shale play in the US, driving the country’s growing crude production.

The company entered the region in 2012 and now has operations covering around 280,000 net acres that produce approximately 39,000 total gross barrels of oil, according to Shell’s website.