Diamondback Energy has announced a definitive agreement to acquire subsidiaries of Double Eagle IV Midco, marking an expansion in the Midland Basin, US.
The assets being acquired encompass around 40,000 net acres in the Midland Basin’s core and are expected to produce 27,000 barrels of oil per day (bopd).
Double Eagle will receive approximately 6.9 million shares of Diamondback’s common stock and a cash payment of $3bn, as part of the transaction.
The cash component of the purchase will be financed through available cash, credit facilities, and potential proceeds from term loans and senior note offerings.
The agreement also includes an accelerated development plan for Diamondback’s noncore southern Midland Basin acreage, which is anticipated to enhance net asset value and drive free cash flow growth from 2026 onwards.
Diamondback Energy chair and chief executive officer Travis Stice said: “Double Eagle is the most attractive asset remaining in the Midland Basin. With 407 locations adjacent to our core position, this largely undeveloped asset adds high-quality inventory that immediately competes for capital.
“Additionally, we see value uplift to our existing inventory as acreage overlap allows for meaningful lateral length extensions and infrastructure synergies. We look forward to seamlessly implementing our industry-leading cost and operational structure on this differentiated asset.”
Diamondback has also committed to selling at least $1.5bn in noncore assets to expedite pro forma debt reduction and sustain a robust balance sheet.
The company aims to decrease net debt to $10bn and maintain long-term leverage between $6bn and $8bn.
The transaction is expected to be finalised by 1 April 2025, pending the fulfilment of standard closing conditions and regulatory approvals.
Stice added: “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.
“While we are adding a small amount of leverage to complete this trade, we are confident that we can quickly reduce debt both naturally through our consistent and growing free cash flow and through our commitment to sell at least $1.5bn of noncore assets.”
