Aug 14 (Reuters) - U.S. oil and gas producer DiamondbackEnergy Inc on Tuesday agreed to buy shale rival EnergenCorp in an all-stock deal valued at $9.2 billion, givingit an expanded footprint in the country's largest and fastestgrowing oil field.
Energen had been under pressure from activist investorCorvex Management for more than a year to sell itself to addressweak returns. The proposed acquisition is Diamondback's secondin the Permian in a week, after striking a deal to pay $1.2billion for Ajax Resources LLC.
West Texas shale producers also are facing pressure toexpand scale and efficiency in the Permian basin as higher costsfor services, and the need to secure limited pipeline transportout of the region, weigh on smaller and midsize companies.
The deal values Energen's properties at about $65,000 peracre (0.4 hectare), among the highest prices in the Permian inthe last several years, said Andrew Dittmar, an M&A analyst atdata provider DrillingInfo.
Concho Resources Inc earlier this year paid $8 billion instock, or more than $70,000 per acre, for West Texas shale rivalRSP Permian.
The purchase brings together two companies with holdings inthe same areas of the Permian, said Dittmar, potentiallyallowing for longer horizontal wells, shared labor andequipment.
For independent oil producers like Diamondback, adding newdrilling prospects represents the best way to compete forservices with larger rivals that have moved into the Permianthis year despite pressure by investors to focus on shareholderreturns.
Shale producers including Apache Corp,ConocoPhillips, Parsley Energy and PioneerNatural Resources recently have increased their 2018capital budgets as oil prices have held above $65 a barrel.
Exxon Mobil Corp, BP PLC and other large oilcompanies that missed out on in the early years of the shaleboom are also boosting shale investments, using historicalalliances to secure a larger role with oilfield service andpipeline companies in the Permian.
Last month, BP agreed to pay $10.5 billion, its largestpurchase in nearly two decades, to acquire assets in three shalebasins from Australian mining company BHP Billiton. That dealalso was spurred by hedge fund Elliott Management.
Corvex and activist Carl Icahn, who last week disclosed hehad acquired more stock in Energen, were not available forimmediate comment.
Diamondback's implied offer of $84.95 per Energen sharerepresents a premium of about 16 percent to Energen's Tuesdayclose. The transaction includes $830 million in net debt.
Energen shares rose 9.3 percent to $79.90 in after-markettrading, while Diamondback shares fell 5.5 percent to $126.40.
Citigroup Global Markets Inc is the financial adviser toDiamondback, while J.P. Morgan Securities LLC and Tudor,Pickering, Holt & Co are financial advisers to Energen.(Reporting by Karan Nagarkatti in Bengaluru; additionalreporting by Ernest Scheyder in Houston; editing by SrirajKalluvila and Tom Brown)