Diamondback Energy to acquire Midland Basin assets of FireBird Energy

Diamondback Energy has signed an agreement to acquire all the Midland Basin leasehold interest and related assets of FireBird Energy in a cash and stock deal.

The acquisition cost consists of the exchange of 5.86 million shares of Diamondback common stock and a cash payment of $775 million.

The deal allows Diamondback Energy to gain approximately 75,000 gross (68,000 net) highly contiguous acres in the Midland Basin, with an estimated production of approximately 17 MBo/d (22 MBoe/d).

Travis Stice — Diamondback Energy chairman and CEO said: “This bolt-on acquisition adds significant, high-quality inventory right in our backyard.

“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.”

The FireBird Energy assets to be acquired are expected to record average production of approximately 19 MBo/d (25 MBoe/d) in 2023.

Upon completion of the transaction, Diamondback Energy is anticipated to reduce operated rig count from three currently to one in the acquired Midland Basin assets.

However, the company expects to maintain 2023 oil production for multiple years with one rig running.

The transaction is expected to be completed late in Q4 2022.

Kirkland & Ellis is acting as legal advisor to Diamondback Energy in connection with the transaction, while Akin Gump Strauss Hauer & Feld LLP and Weil, Gotshal & Manges are legal advisors to FireBird Energy and its affiliates.