Diamondback Energy Seals Midland Basin Deal
Deal News | Feb 18, 2025 | Globenewswire
Diamondback Energy, Inc. has agreed to acquire certain subsidiaries of Double Eagle IV Midco, LLC in a deal valued at $3 billion in cash and 6.9 million shares of its stock. This acquisition aims to accelerate development in the Midland Basin, enhancing Net Asset Value for Diamondback as it leverages Double Eagle's undeveloped acreage for more efficient production. To fund this acquisition, Diamondback will utilize a combination of cash on hand and various borrowing mechanisms. In an effort to maintain fiscal stability, the company plans to sell off $1.5 billion of non-core assets to reduce debt, all while accelerating free cash flow growth beyond 2026. The acquisition enhances Diamondback's strategic positioning within the Permian Basin, expanding its high-quality inventory. The transaction is slated to close by April 1, 2025, subject to regulatory approval. Multiple advisors are engaged in this deal, including TPH&Co, Perella Weinberg Partners, and law firms Kirkland & Ellis LLP and Vinson & Elkins LLP.
Sectors
- Oil and Gas
- Finance and Investments
Geography
- United States – Both Diamondback Energy and Double Eagle are based in the U.S., with the transaction focusing on assets within Texas' Midland Basin.
- Texas – The acquisition targets assets specifically located in the Midland Basin, a significant oil field in Texas.
Industry
- Oil and Gas – The article concerns Diamondback Energy’s acquisition of Double Eagle IV subsidiaries in the Midland Basin, impacting oil and gas resource exploration and production.
- Finance and Investments – Details of the financial structure of the acquisition, including the use of credit facilities and asset divestments, highlight the financial strategies involved.
Financials
- $3 billion – Cash portion of the Diamondback's acquisition of Double Eagle subsidiaries.
- 6.9 million shares – Diamondback shares to be exchanged as part of the acquisition deal.
- 5.2x 2025 EBITDA – Valuation multiple for the transaction.
- $1.5 billion – Planned asset sales by Diamondback to reduce debt post-acquisition.
- 27 MBo/d – Estimated production rate from Double Eagle's assets.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Diamondback Energy, Inc. | Bidding Company | Company | Independent oil and natural gas company focused on the acquisition and development of unconventional resources. |
| Double Eagle IV Midco, LLC | Target Company | Company | Owns subsidiaries with significant acreage in the Midland Basin, targeted for acquisition by Diamondback. |
| TPH&Co, Perella Weinberg Partners | Financial Advisor | Company | Provided financial advisement to Diamondback Energy for the acquisition. |
| Kirkland & Ellis LLP | Legal Advisor | Company | Acted as legal advisor to Diamondback Energy in the transaction. |
| RBC Capital Markets, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC | Financial Advisor | Company | Provided financial advisement to Double Eagle IV Midco, LLC for the acquisition. |
| Vinson & Elkins LLP | Legal Advisor | Company | Acted as legal advisor to Double Eagle IV Midco, LLC in the transaction. |