US-based Diamondback Energy has agreed to purchase all the leasehold interest and related assets of Firebird Energy in a cash and stock deal valued at $1.6bn.

Under the terms of the purchase agreement, shareholders of upstream oil and gas company FireBird Energy will receive 5.86 million Diamondback shares, and $775m in cash.

Diamondback chairman and CEO Travis Stice said: “This bolt-on acquisition adds significant, high-quality inventory right in our backyard.

“With over 350 locations adjacent to our current Midland Basin position, this asset adds more than a decade of inventory at our anticipated development pace, including inventory that competes for capital right away in Diamondback’s current development plan.

“Also, importantly, this transaction is accretive on all relevant 2023 and 2024 financial metrics, immediately increasing expected per share returns to our stockholders in the near-term while also improving the long-term duration of the Company’s cash return profile.”

FireBird currently owns about 75,000 gross acres of ‘highly contiguous’ prospects in the Midland Basin in Texas.

The assets are estimated to have production of about 17 million barrels of oil per day at the time of the closing of the transaction.

The acquisition of FireBird marks the biggest transaction for Diamondback, which purchased QEP Resources and Guidon Operating for a total consideration of $3.2bn in 2020.

The latest transaction is planned to be completed in the fourth quarter this year.

Stice added: “We remain committed to capital discipline by returning at least 75% of our Free Cash Flow to stockholders while also maintaining a fortress balance sheet.”

Diamondback plans to divest at least $500m of non-core assets by the end of 2023 to reduce debt.

In a separate announcement in the US, Northern Oil and Gas (NOG) has agreed to acquire certain non-operated interests in the Delaware Basin from a private party (seller) for $130m in cash.

The assets considered for acquisition include 5.3 net producing wells, 2.1 net wells-in-process and 17.2 net engineered economic undeveloped locations.

These are located in Lea and Eddy Counties, New Mexico and Loving and Winkler Counties in Texas.