Key points:
- Diamondback Energy will acquire FireBird Energy
- The company will pay stock and cash to acquire FireBird
- FANG shares are up 0.8%
Diamondback Energy (NASDAQ: FANG) said Tuesday evening that it has agreed to buy FireBird Energy in a cash and stock deal valued at $1.6 billion.
In accordance with the acquisition agreement, Diamondback will purchase all of FireBird's leasehold interests and related assets in return for 5.86 million shares of Diamondback and $775 million in cash. The purchase represents Diamondback's largest transaction since it spent a combined $3.2 billion to buy QEP Resources and Guidon Operating in 2020 back-to-back.
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Diamondback said the cash portion of the deal will be funded through a mix of cash on hand, borrowings made under the company's credit facility, and proceeds from an offering of senior notes.
The assets of FireBird cover approximately 68,000 acres in the Midland Basin, with an estimated daily output of 17 million barrels of oil.
“This bolt-on acquisition adds significant, high-quality inventory right in our backyard,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback.
Stice added that “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.”
The deal is expected to close late in the fourth quarter of 2022.
Diamondback Energy shares are up 0.8% premarket. So far this year, the company's shares have gained 29.5% as oil and gas-related stocks have benefitted from the surge in energy prices.
