Diamondback Energy, Inc. announced that it has entered into a definitive purchase agreement to acquire certain subsidiaries of Double Eagle in exchange for approximately 6.9 million shares of Diamondback common stock and $3 billion of cash, subject to customary adjustments.
The cash portion of this transaction is expected to be funded through a combination of cash on hand, borrowings under the company’s credit facility and/or proceeds from term loans and senior notes offerings.
As part of this agreement, Diamondback and Double Eagle have also agreed to accelerate development on a portion of Diamondback’s non-core southern Midland Basin acreage. This acceleration is expected to bring forward net asset value (NAV” to Diamondback by developing Diamondback’s lower quality acreage at a faster pace than current expectations. As a result, Diamondback expects significant Free Cash Flow growth in 2026 and beyond with minimal capital deployment through this accelerated development plan.
Diamondback is also committing to sell at least $1.5 billion of non-core assets to accelerate pro forma debt reduction in order to maintain its strong balance sheet. Diamondback expects to reduce net debt to $10 billion and, long term, maintain leverage of $6 billion to $8 billion.
“Double Eagle is the most attractive asset remaining in the Midland Basin,” stated Travis Stice, Chairman and Chief Executive Officer 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. We look forward to seamlessly implementing our industry leading cost and operational structure on this differentiated asset.”
Mr. Stice continued, “The Permian Basin continues to consolidate rapidly. We have worked tirelessly over the last thirteen years to position Diamondback to have the longest duration of high quality, low-breakeven inventory; a position we are solidifying with today’s announcement. While we are adding a small amount of leverage to complete this trade, we are confident that we can quickly reduce debt both naturally through our consistent and growing Free Cash Flow and through our commitment to sell at least $1.5 billion of non-core assets.”
Cody Campbell and John Sellers, Co-Chief Executive Officers of Double Eagle, commented, “We are excited to announce our agreement with Diamondback. We believe our team has built a truly standout asset that further increases Diamondback’s high-quality inventory. It was important to us that we maintain the stewardship of this asset going forward not only with a world-class Midland operator but also a group that shares our core values and understands the importance of community impact in West Texas.”
Asset highlights:
- Approximately 40,000 net acres in the core of the Midland Basin
- Estimated run-rate production of approximately 27 MBo/d (69% oil)
- $200 million of capital expenditures anticipated in 2025 at current Midland Basin well costs of $555 to $605 per foot
- Extends pro forma inventory life in the core of the Midland Basin
- 68% of the asset is undeveloped with 407 estimated gross (342 net) horizontal locations in primary development targets with an average lateral length of approximately >11,000’
- 44 gross upside locations primarily located in emerging zones
