Diamondback Energy Expands in Permian with $4.08 Billion Double Eagle Deal
(Reuters) — Diamondback Energy said on Tuesday it would buy certain units of EnCap Investments-backed energy producer Double Eagle for $4.08 billion in cash and stock, expanding its presence in the oil-rich U.S. Permian Basin.
The shale firm has been doubling down on the Permian basin, which straddles West Texas and New Mexico, striking a $26-billion deal in 2024 to buy rival Endeavor Energy Partners to become the third-largest producer in the region.
Diamondback said the deal would give access to about 40,000 net acres in the core of Midland Basin, one of the last large assets in the basin.
The company's shares were up marginally in choppy morning trade.
Truist Securities analyst Neal Dingmann said shares were being pressured as some investors viewed the transaction as more expensive than recent Permian deals and were not appreciating the stability of the assets purchased.
Oil output growth in the top U.S. oilfield is expected to slow by at least 25% this year despite calls by President Donald Trump to "drill, baby, drill", as producers focus on keeping spending under control and achieving higher prices.
Diamondback Energy expects $200 million of capital expenditures in 2025 and anticipates a run-rate production of about 27,000 barrels of oil per day from the Midland assets.
The company has also committed to selling at least $1.5 billion of non-core assets to reduce pro forma debt. It expects to lower net debt to $10 billion and maintain leverage of $6 billion to $8 billion in the long term.
Last year, Reuters reported Double Eagle was exploring the sale of its Permian Basin-based producer.
Diamondback will pay roughly 6.9 million shares and $3 billion in cash. It expects the deal to close on April 1.
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