Diamondback Boosts Midland Basin Presence With $4-Billion Acquisition

Diamondback Boosts Midland Basin Presence With $4-Billion Acquisition | OilPrice.com

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Breaking News:

ByCharles Kennedy– Feb 18, 2025, 8:30 AM CST

Diamondback Energy, Inc. (NASDAQ: FANG) on Tuesday announced a deal to buy Double Eagle IV Midco in an acquisition valued at about $4 billion, which gives the buyer increased presence in the Midland Basin in the top-oil producing U.S. formation, the Permian.

Diamondback Energy has signed a definitive purchase agreement to buy certain subsidiaries of Double Eagle IV Midco, LLC in exchange for approximately 6.9 million shares of Diamondback common stock and $3 billion of cash, the company said, confirming earlier reports of the acquisition.

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“Double Eagle is the most attractive asset remaining in the Midland Basin,” Diamondback chairman and CEO Travis Stice said in a statement.

“With 407 locations adjacent to our core position, this largely undeveloped asset adds high-quality inventory that immediately competes for capital.”

Diamondback expects to fund the cash portion of the transaction through a combination of cash on hand, borrowings under the company’s credit facility and/or proceeds from term loans and senior notes offerings.

For Diamondback, this would be the second major deal in a year, after it took over Endeavor Energy Resources in 2024 in a deal with a price tag of $28 billion.

Concurrent with the Double Eagle deal, Diamondback also announced today it is committing to sell at least $1.5 billion of non-core assets to accelerate pro forma debt reduction in order to maintain a strong balance sheet. Diamondback expects to reduce net debt to $10 billion and, long term, maintain leverage of $6 billion to $8 billion.

Last year, the shale space saw a flurry of mergers and acquisitions, with the total hitting $105 billion. That was lower than the $192 billion in deals struck in 2023 but still a substantial sum.

This year, a slowdown in M&A, due to a lack of available reasonably-priced targets, is set to continue, according to energy analytics firm Enverus. Merger activity fell in the last quarter of 2024, but natural gas opportunities could help acquisitions rebound this year, Enverus said.

By Charles Kennedy for Oilprice.com

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