Diamondback Energy (NASDAQ:FANG) Announces Planned Acquisition of Double Eagle IV Midco, LLC

Diamondback Energy, Inc. (NASDAQ:FANG) disclosed in a recent 8-K filing with the Securities and Exchange Commission its intention to acquire certain subsidiaries of Double Eagle IV Midco, LLC for a combination of cash and stock. The company, alongside its subsidiary Diamondback E&P LLC, entered into a definitive securities purchase agreement with Double Eagle IV Midco, LLC. This agreement outlines the acquisition of all the issued and outstanding interests of three wholly-owned subsidiaries of Double Eagle IV Midco, LLC, with the transaction, titled the “Pending Acquisition,” valued at $3.0 billion in cash and around 6.9 million shares of Diamondback’s common stock. The acquisition is slated to close on April 1, 2025, subject to customary closing conditions and regulatory approval.

The cash portion of the deal is anticipated to be financed through various means, including cash reserves, borrowings under existing credit facilities, and potential offerings of term loans and senior notes. The issuance of shares under this agreement will be carried out under an exemption from the Securities Act of 1933, known as Section 4(a)(2). This exemption is applicable for issuer sales that do not involve a public offering.

In a move to inform the public, Diamondback Energy, Inc. issued a press release on February 18, 2025, detailing the Pending Acquisition. This acquisition not only signifies a strategic move for the company but also sets forth plans for accelerated development on a segment of Diamondback’s non-core southern Midland Basin acreage. The company anticipates a significant increase in Free Cash Flow from this accelerated development initiative in 2026 and beyond, with minimal capital expenditure.

As part of its strategic vision, Diamondback Energy is committed to selling at least $1.5 billion of non-core assets to expedite debt reduction and strengthen its balance sheet. This decision is aligned with a broader plan to reduce net debt levels and maintain a healthy leverage ratio long-term.

Commenting on the Pending Acquisition, Travis Stice, Chairman and Chief Executive Officer of Diamondback, emphasized the strategic importance of this move, citing the acreage’s proximity to the company’s core holdings and the envisaged benefits from operational synergies and extensions. The growth potential in the Permian Basin is evident, and Diamondback’s efforts are poised to strengthen the company’s position in the industry.

As outlined in the filing, the transaction with Double Eagle IV Midco, LLC is expected to bolster Diamondback Energy’s asset portfolio significantly. With notable assets in the heart of the Midland Basin, estimated production rates, and plans for capital expenditures, the transaction aims to enhance free cash flow and create value for shareholders.

The planned acquisition underlines Diamondback’s strategic positioning in the market, gearing up for growth and operational efficiency in the evolving energy landscape.

The company aims to close the transaction on April 1, 2025, following the necessary regulatory approvals and meeting standard closing conditions.

Diamondback Energy’s financial advisor on this acquisition is TPH&Co, with legal advisory support from Kirkland & Ellis LLP. On the other side, RBC Capital Markets, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC are acting as financial advisors to Double Eagle, with legal support from Vinson & Elkins LLP.

About Diamondback Energy, Inc.: Diamondback Energy, Inc., headquartered in Midland, Texas, focuses on the acquisition, development, exploration, and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas.

Disclaimer: This news article is based on the official 8-K filing by Diamondback Energy, Inc. with the Securities and Exchange Commission. It is recommended to refer to the original filing for complete and accurate information.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Diamondback Energy’s 8K filing here.

Diamondback Energy Company Profile

Diamondback Energy, Inc, an independent oil and natural gas company, acquires, develops, explores, and exploits unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico.