Diamondback is making 2 deals
Diamondback Energy is planning a pair of acquisitions worth more than $3 billion that would strengthen its position in the Midland Basin of West Texas.
The Midland oil and gas producer said Monday that its acquisitions of Denver-based QEP Resources and Blackstone Groupowned Guidon Operating LLC would bring its total leasehold interests in the Midland Basin to more than 276,000 surface acres and yield at least $60 million in savings from efficiencies.
“Diamondback does not need to participate in industry consolidation to simply get bigger,” company CEO Travis Stice said in a
statement. “We participate in corporate development opportunities that we firmly believe will increase the long-term value for our stockholders’ investment.”
A newwave of consolidation is sweeping the energy sector as the industry fights its way out of the oil bust caused by the coronavirus pandemic. Oil and gas companies are combining and acquiring assets to better weather the ups and downs of the market.
Other oil company consolidation efforts include ConocoPhillips’ $9.7 billion takeover of Concho Resources, Pioneer Natural Resources’ $4.5 billion pursuit of Parsley Energy and Devon Energy’s plans to purchase WPX Energy for nearly $2.6 billion.
Diamondback plans to acquire QEP in an all-stock transaction valued at about $2.2 billion, including QEP’s debt of $1.6 billion. The deal, unanimously approved by the two companies’ boards of directors, is expected to close by the second quarter of 2021.
The company plans to acquire Guidon Operating in a cash-and-stock deal valued at around $862.3 million as of Friday. The Midland producer is offering 10.63 million Diamondback shares and $375 million of cash, funded through cash on hand and borrowing under the company’s credit line. The Guidon deal is expected to close at the end of February.
The deals will give Diamondback 56 drilled but not completed oil wells along with pipelines in the Permian Basin.
Diamondback said it could sell QEP’s assets in the Williston Basin of Canada to pay down its debt. Diamondback shares closed down nearly 2 percent Monday at $45.02