By Arathy Somasekhar

HOUSTON, Aug 16 (Reuters) - Autry Stephens, the

billionaire founder and chairman of Endeavor Energy Resources,

has died aged 86, the company disclosed on Friday, after a

prolonged battle with cancer.

Stephens died early on Friday morning, a source familiar

with the matter said.

Known for a relentless work ethic and frugal nature, he had

continued to work while under medical care and relied on friends

to fly him in a private jet to cancer treatments in Houston.

His work ethic was shaped by tough years in the 1980s and

1990s when he struggled to get Endeavor off the ground, sources

said. The wildcatter launched Endeavor in 1979 and grew it into

one of the largest closely held U.S. oil and gas firms by buying

tough-to-drill wells that oil majors snubbed.

Stephens in February agreed to sell his Midland, Texas-based

company for $26 billion to local rival Diamondback Energy ( FANG )

. He had rebuffed many offers for the business over the

years. The deal is expected to close later this year.

Stephens' daughter, Lyndal Greth, becomes chairman of

Endeavor's board of managers, the company said on Friday. Greth

was previously vice chairman.

Born in 1938, Stephens grew up on a farm in DeLeon, Texas,

where his family grew peanuts and fruits. He studied engineering

and went to work for Humble Oil & Refining, a predecessor to

Exxon Mobil ( XOM ), according to a profile on the University of

Texas' engineering school website.

Stephens drilled his first well in 1979 in Midland county,

Texas. 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.

Stephens was well known in Midland, Texas, the heart of the

U.S. shale business, and for bringing his dog to his office

regularly. He named one of his companies Big Dog Drilling.

"He was stubborn and persistent. And in the right place at

the right time," said Javaid Anwar, a Texas businessman who

first met Stephens 1976 while working at a bank in Midland.

The two became friends in the years that followed through

numerous fishing trips and business deals.

"He was a fish hog," joked Anwar, recounting how Stephens

used to take up his coveted turns to reel in catch on their

fishing trips.

Anwar helped fly Stephens to Houston on his private jet for

cancer treatments over the past year, which gave the two the

opportunity to look back at old memories from their time in the

oil business.

"He was one of the pioneers of horizontal drilling that

helped the Permian come to produce nearly 6.5 million barrels of

oil per day, roughly half of the U.S. total," Anwar said.