Diamondback Energy said on 18 February that it is acquiring subsidiaries of Double Eagle IV in a deal valued at more than $4 billion.
The transaction includes $3 billion in cash and 6.9 million shares of Diamondback stock in a move that the company said hands it the biggest target still available in the Midland Basin side of the Permian Basin in Texas.
The acquisition comes amid a slowdown in US shale mergers and acquisitions following a wave of large deals over the past 2 years, but highlights continued consolidation opportunities in the Permian Basin.
“Double Eagle is the most attractive asset remaining in the Midland Basin,” said Diamondback CEO Travis Stice in a statement. “The Permian Basin continues to consolidate rapidly. We have worked tirelessly over the last 13 years to position Diamondback to have the longest duration of high-quality, low-breakeven inventory; a position we are solidifying with today’s announcement."
The deal will boost Diamondback's holdings in the Midland region by 40,000 net acres with an estimated 27,000 BOE/D, 69% of which is crude oil. The Midland-based independent operator said about 68% of the acreage is undeveloped, providing it with more than 400 locations for new wells with 11,000-ft laterals.
The cash portion of the transaction will be financed through a mix of existing cash, credit facility borrowings, and potential debt offerings. The deal, expected to close by 1 April, remains subject to regulatory approvals and customary closing conditions.
To offset the acquisition’s impact on its balance sheet, Diamondback plans to sell at least $1.5 billion in noncore assets, aiming to reduce net debt to $10 billion.
Diamondback has made several major acquisitions in recent years, including its $26-billion deal to buy private operator Endeavor Energy Resources a year ago this month. At the time of the announcement, Diamondback said the acquisition was set to increase its average crude production from 273,000 to 468,000 B/D and its gross acreage by nearly 70% to 838,000 acres.
In 2022, Diamondback added more than 350 drilling locations in the Permian when it acquired a private equity-backed producer in a cash-and-stock deal valued at $1.6 billion. In December 2020, Diamondback announced the acquisition of fellow Permian Basin oil producers QEP Resources and Guidon Energy in separate deals with a combined value of around $3 billion.
