Concho Resources Inc. says it's buying shale-drilling energy producer RSP Permian Inc. for about $9.5 billion in stock, sending RSP shares up more than 15 percent.
Concho said Tuesday that the combined company will have the biggest drilling operation in the energy-rich Permian Basin of Texas and New Mexico, with 27 rigs spread over 640,000 acres.
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The deal, if approved by RSP shareholders, will immediately increase Concho's earnings per share, according to the company.
But a Wood Mackenzie analyst says Concho is paying a rich premium of 29 percent and will be challenged to meet its $2 billion goal for boosting RSP's efficiency.
RSP shares rose $6.08 to close at $45, while Concho shares fell $13.75, or 8.8 percent, to $143.25.