The deal includes 407 estimated gross horizontal locations with an average lateral length of over 11,000 ft. (Source: Shutterstock/ Diamondback Energy Inc.)
Diamondback Energy (FANG) has agreed to acquire Permian producer Double Eagle IV for approximately 6.9 million shares of Diamondback and $3 billion in cash, according to a Feb. 18 press release.
Earlier talks about the deal had valued EncCap Investments-backed Double Eagle at over $5 billion, The Wall Street Journal reported Feb. 14. FANG shares closed Feb. 14 at $156.99 per share.
Diamondback is acquiring approximately 40,000 net acres in the Midland Basin’s core with an estimated production of approximately 27,000 bbl/d (69% oil), the release stated. Fort Worth, Texas-based Double Eagle currently holds over 95,000 net acres in the Midland Basin.
The deal includes 407 estimated gross horizontal locations with an average lateral length of over 11,000 ft. The transaction is valued at approximately 5.2x 2025 EBITDA.
In the 12 months ending November 2024, Double Eagle IV produced about 31.5 MMboe (73% liquids), according to the Texas Railroad Commission.
Diamondback, who closed a $26 billion acquisition of private Permian E&P Endeavor Energy Resources, said it is committed to divesting at least $1.5 billion in non-core assets toward debt reduction.
The cash portion of this transaction is expected to be funded through a combination of cash on hand, borrowings under Diamondback’s credit facility and/or proceeds from term loans and senior notes offerings, the release stated.
"Double Eagle is the most attractive asset remaining in the Midland Basin," said Travis Stice, chairman and CEO of Diamondback. "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.”
Diamondback expects the transaction to close on April 1, subject to customary closing conditions and regulatory approval.
TPH&Co is serving as financial advisor to Diamondback. Kirkland & Ellis LLP is acting as legal advisor to Diamondback.
RBC Capital Markets, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as financial advisors to Double Eagle. Vinson & Elkins LLP is acting as legal advisor to Double Eagle.
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