Diamondback Energy, Inc. announced that it has agreed to acquire all leasehold interest and related assets of FireBird Energy LLC (FireBird) in exchange for 5.86 million shares of Diamondback common stock and $775 million of cash.
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 a senior notes offering. The cash outlay at closing is expected to be approximately $700 million due to the expected Free Cash Flow to be generated on the asset between the effective date and expected closing date late in the fourth quarter of 2022.
“This bolt-on acquisition adds significant, high-quality inventory right in our backyard,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback. “With over 350 locations adjacent to our current Midland Basin position, this asset adds more than a decade of inventory at our anticipated development pace, including inventory that competes for capital right away in Diamondback’s current development plan. Also, importantly, this transaction is accretive on all relevant 2023 and 2024 financial metrics, immediately increasing expected per share returns to our stockholders in the near-term while also improving the long-term duration of the Company’s cash return profile.”
Mr. Stice continued, “We remain committed to capital discipline by returning at least 75% of our Free Cash Flow to stockholders while also maintaining a fortress balance sheet. To do this, we are today announcing a target to sell at least $500 million of non-core assets by year-end 2023, with proceeds earmarked for further debt reduction.”
