Diamondback Energy is set to acquire certain units of EnCap Investments-backed energy producer Double Eagle for $4.08 billion in cash and stock, expanding its presence in the US Permian basin. The deal, expected to close on April 1, will grant access to approximately 40,000 net acres in the Midland Basin.
The acquisition is Diamondback’s latest move to bolster its position in the region, where it has already struck a $26-billion deal to buy rival Endeavor Energy Partners last year. The company aims to become the third-largest producer in the Permian basin, one of the world’s largest oilfields.
Despite some investors expressing concerns that the deal is more expensive than recent transactions, Diamondback’s shares are expected to rise due to the strategic move. Oil output growth in the top US oilfield is forecasted to slow by at least 25% this year, prompting producers to focus on controlling spending and achieving higher prices.
Diamondback Energy expects $200 million of capital expenditures in 2025 and anticipates a production rate of around 27,000 barrels of oil per day from the acquired assets. The company plans to reduce its debt by selling non-core assets, aiming to lower net debt to $10 billion and maintain leverage between $6 billion and $8 billion.
Source: https://finance.yahoo.com/news/diamondback-energy-expand-permian-4-112103685.html