Summary
Diamondback Energy, Inc. (FANG) filed an 8-K on September 9, 2013, detailing several significant corporate and operational developments. The company entered into a Fourth Amendment to its Credit Agreement, increasing its permitted unsecured senior notes issuance capacity from $250 million to $500 million, and modifying EBITDAX and Interest Expense calculations for a transitional period. This financial maneuver signals a strategic move to enhance liquidity and financial flexibility. Operationally, FANG provided updates on substantial acreage acquisitions in the Permian Basin, including a pending $440 million acquisition of mineral interests in Midland County and a recently completed acquisition in Martin County along with a pending acquisition in Dawson County, totaling $165 million for leasehold interests. These "Recently Announced Acquisitions" are expected to significantly expand the company's footprint and reserve base. The report also highlighted the company's increasing success and focus on horizontal drilling, detailing production data from several horizontal wells and providing an updated outlook on identified drilling locations. These developments collectively indicate aggressive growth initiatives and a strong focus on expanding its Permian Basin operations and proved reserves.
Key Highlights
- 1Diamondback Energy amended its Credit Agreement to increase its permitted senior notes issuance from $250 million to $500 million, enhancing its financial flexibility.
- 2The company is pursuing significant acreage expansion in the Permian Basin through multiple acquisitions, including a $440 million mineral interest purchase in Midland County and $165 million in leasehold acquisitions in Martin and Dawson Counties.
- 3A recently completed acquisition in Martin County adds 4,506 net leasehold acres with producing wells and identified horizontal drilling locations.
- 4The company is increasing its focus and investment in horizontal drilling, with 17 horizontal wells drilled or in progress as operator and detailed production data from existing wells.
- 5Pro forma for pending acquisitions, Diamondback's net proved reserves are estimated at 57.9 million BOE as of September 1, 2013, with a PV-10 value of $952.3 million.
- 6Diamondback announced plans to offer $450 million in senior notes to qualified institutional buyers and non-U.S. persons to fund acquisitions and for general corporate purposes.
- 7The company anticipates a significant increase in its borrowing base, from a current $180 million to a preliminary range of $275-$300 million, supported by its updated reserve report and pending acquisitions.