HOUSTON, TEXAS (Editors at Energy Analytics Institute, 18.Feb.2025) — Diamondback Energy, Inc. entered into a definitive agreement to acquire certain subsidiaries of Double Eagle IV Midco, LLC in exchange for 6.9 million shares of Diamondback common stock and $3bn of cash.
The transaction is slated to close on 1 Apr. 2025, subject to the satisfaction of customary closing conditions and regulatory approval, Diamondback said 18 Feb. 2025 in an official statement.
The cash portion is expected to be funded through a combination of cash on hand, borrowings under Diamondback’s credit facility and/or proceeds from term loans and senior notes offerings, the company said.
Diamondback and Double Eagle also agreed to accelerate development on a portion of Diamondback’s non-core southern Midland Basin acreage. This 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 said it is also committing to divest at least $1.5bn 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 $10bn and, long term, maintain leverage of $6bn-$8bn, the company said.
“Double Eagle is the most attractive asset remaining in the Midland Basin,” Diamondback chairman and CEO Travis Stice said in the statement.
“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,” Stice said.
Stice said the Permian continues to consolidate rapidly.
“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,” Stice said.
Deal highlights
Consolidated Scale in the Midland Basin
— Approximately 40,000 net acres in the core of the Midland Basin
— Estimated run-rate production of 27,000 b/d (69% oil)
— $200mn of Capex 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
Transaction Highlights
— Valued at 5.2x 2025 EBITDA
— Enhances expected pro forma 2026 Free Cash Flow per share by 5%+
— Immediately accretive to all relevant financial metrics including Cash Flow per share, Free Cash Flow per share and NAV per share
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By Editors at Energy Analytics Institute. © 2025 Energy Analytics Institute (EAI). All Rights Reserved.
