Texas-based oil and gas company Diamondback Energy has announced a $1.6 billion deal to acquire FireBird Energy, consolidating its fossil fuel assets and maximizing growth in the Permian Basin.
Diamondback will pay $775 million in cash and 5.6 million shares valued at about $140 each. To pay off debt, the company intends to sell $500 million in assets from other regions by the end of 2023, according to Chief Executive Officer Travis Stice.
Included in the deal are about 75,000 acres in the eastern Midland sub-basin, which produce 22,000 barrels of oil equivalent per day (BOE/D). The land contains 353 horizontal drilling locations, with about 98% currently operating. The output is expected to increase to 25,000, Diamondback said, and operating oil and gas rigs will decrease from three to one.
“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,” Stice said.
Earlier in October, Minnesota-based Northern Oil and Gas purchased $130 million in acres in the western Delaware sub-basin, the latest in its string of Permian Basin purchases. The transaction included about 2,100 acres, five producing wells, and about 17 undeveloped locations.
“NOG continues to press its advantage as a well-capitalized, reliable, and consistent purchaser of high-quality non-operated properties,” said Northern CEO Nick O’Grady. “More importantly, NOG’s technical team continues to underwrite for returns with precision and focus on the best assets available in the marketplace today.”
Energy companies have been consolidating assets and concentrating on core-operated regions rather than looking for new fossil fuel-producing areas, seeking to insulate themselves from a fall-off in global energy exploration and the uncertainty that has caused, according to analytics firm Rystad Energy.