A wholly owned subsidiary of Lario Oil & Gas Company, Lario Permian owns nearly 25,000 acres in the Northern Midland basin in Texas, with an estimated average production rate of approximately 18,000 barrels of oil per day for 2023.
Under the deal, Diamondback will acquire Lario Permian in exchange for 4.18 million shares of Diamondback stock and $850m in cash.
Diamondback chairman and CEO Travis Stice said Lario is a bolt-on to the firm’s existing Martin County position in Texas.
“This is a deal that checks all the boxes Diamondback looks for in an acquisition, as it brings over 150 gross locations in the core of the Northern Midland basin, and also provides immediate accretion to all relevant financial metrics, enhancing Diamondback’s overall value proposition to our stockholders.”
Stice added: “When combined with our pending FireBird acquisition, we will grow our Midland basin footprint by approximately 83,000 net acres, add 500 high-quality drilling opportunities that compete for capital with our current development plan, and increase our 2023 production profile by approximately 37,000 barrels of oil per day (50,000 barrels of oil equivalent per day).”
Upon completion of the deal, Diamondback plans to reduce the operated rig count for 2023 development from the current two, down to one or less.
The transaction is subject to customary closing conditions and adjustments. It is scheduled to close on 31 January 2023.