Diamondback Energy has announced the acquisition of several Double Eagle IV Midco, LLC consortiums for $3 billion and 6.9 million shares of stock. The company revealed in a press release that the purchase will be financed through a combination of cash, and either company credit or term loans and senior notes offerings.
According to the press release, Diamondback Energy and Double Eagle, an independent oil and natural gas company based in Fort Worth, have agreed to accelerate development on a portion of Diamondback’s non-core southern Midland Basin acreage as part of the deal. The acquisition includes approximately 40,000 net acres in the Midland Basin, with an estimated production of 27,000 barrels of oil daily.
The company plans to sell at least $1.5 billion of non-core assets to expedite pro forma debt reduction while maintaining a strong balance sheet. Diamondback aims to reduce net debt to $10 billion and maintain long-term leverage between $6 billion and $8 billion.
Travis Stice, chairman and CEO of Diamondback, said that Double Eagle is considered "the most attractive asset remaining in the Midland Basin." He added, "With 407 locations adjacent to our core position, this largely undeveloped asset adds high-quality inventory that immediately competes for capital." Stice also noted the potential value uplift due to acreage overlap allowing for lateral length extensions and infrastructure synergies. "We look forward to seamlessly implementing our industry-leading cost and operational structure on this differentiated asset," he said.