Diamondback’s Stice Swears Off Major Acquisitions, But Will Market Believe?

CEO Travis Stice acknowledged Diamondback Energy is perceived as a serial acquirer but said the company won’t be stepping out in a seller’s market.

Diamondback’s Stice Swears Off Major Acquisitions, But Will Market Believe?

During a mid-May earning call, Diamondback Energy CEO Travis Stice repeated twice that “large-scale M&A is off the table” for the Permian operator. (Source: Hart Energy, Diamondback Energy logo by Pavel Kapysh / Shutterstock.com)

The strange case of Diamondback Energy Inc.’s trailing stock performance among its peers, a point of fixation among analysts, appears to have its roots in the Permian Basin operator’s slightly less aggressive framework for rewarding shareholders and its reputation as a “serial acquirer.”

It’s not a reputation without merit. Over the years, even a cursory glance at Diamondback’s acquisitions lends some credence to that view. Since 2017, the company has closed four deals valued at $1 billion or more. That includes its 2021 acquisition of QEP Resources for $2.2 billion. Its largest deal during that span was its 2018 acquisition of Energen Corp. for $9.2 billion worth of stock.

But the company is now publicly holding firm to a lower-key acquisition strategy that won’t include the massive deals that have built it into one of the largest operators in the Permian Basin.

And the company’s deal activity has been muted so far this year.

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Darren Barbee

Darren Barbee is senior editor for Oil and Gas Investor magazine.