Zinger Key Points
- Diamondback to acquire Double Eagle IV assets for $3 billion in cash plus 6.9M million shares.
- Deal adds 40,000 acres in Midland Basin, boosting 2026+ FCF by 5%+.
- Get real-time earnings alerts before the market moves and access expert analysis that uncovers hidden opportunities in the post-earnings chaos.
Diamondback Energy, Inc. FANG intends to acquire subsidiaries of Double Eagle IV Midco for approximately 6.9 million shares of its common stock and $3 billion in cash.
The company plans to fund the cash portion of the deal through cash on hand, credit facility borrowings, and potential term loans or senior notes offerings.
The asset spans approximately 40,000 net acres in the core of the Midland Basin, with an estimated run-rate production of 27 MBo/d, of which 69% is oil.
The acquisition extends the pro forma inventory life in the region, with 68% of the asset remaining undeveloped, including 407 estimated gross (342 net) horizontal locations in primary development targets, averaging a lateral length of over 11,000 feet.
The company projects capital expenditures for 2025 of $200 million, based on current Midland Basin well costs ranging from $555 to $605 per foot.
Diamondback projects closing the transaction on April 1, 2025, pending regulatory approval and the fulfillment of customary closing conditions.
Diamondback and Double Eagle have also agreed to fast-track development on Diamondback's non-core southern Midland Basin acreage, accelerating Net Asset Value (NAV) realization.
This transaction is expected to enhance Free Cash Flow per share growth by 5%+ from 2026 onward.
Also, Diamondback plans to sell a minimum of $1.5 billion in non-core assets to expedite debt reduction and preserve its strong financial position.
The company aims to lower net debt to $10 billion and sustain long-term leverage between $6 billion and $8 billion.
Diamondback CEO Travis Stice said there are 407 locations adjacent to the company’s “core position.”
“Additionally, we see value uplift to our existing inventory as acreage overlap allows for meaningful lateral length extensions and infrastructure synergies,” he added.
The company plans to release its fourth quarter 2024 financial results on February 24, 2025.
Investors can gain exposure to the FANG stock via two ETFs:
- Texas Capital Funds Trust Texas Capital Texas Oil Index ETFOILT
- IShares U.S. Oil & Gas Exploration & Production ETF IEO.
Price Action: FANG shares are down 0.54% at $156.14 at the last check Tuesday.
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