8-KMaterial AgreementsRegulation FDOther Events+1

Diamondback Energy, Inc. 8-K Report, Material Agreement (May 13, 2015)

Filed May 13, 2015For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) filed an 8-K on May 13, 2015, to announce the closing of a public offering of its common stock. The company successfully sold 4,000,000 shares at $72.53 per share, generating approximately $333.4 million in net proceeds after accounting for underwriting discounts and expenses. An additional 600,000 shares were purchased by the underwriter under an option, which was exercised in full. The primary purpose of this offering was to fund a significant portion of Diamondback Energy's previously announced pending acquisitions of approximately 15,940 gross acres (11,948 net acres) in the Midland Basin, specifically in northwest Howard County, for an aggregate purchase price of approximately $437.8 million. Any remaining proceeds not used for acquisitions will be applied to repay outstanding borrowings under the company's revolving credit facility, fund exploration and development activities, or for general corporate purposes.

Key Highlights

  • 1Diamondback Energy closed a public offering of 4 million shares of common stock at $72.53 per share, raising approximately $333.4 million in net proceeds.
  • 2An underwriter option for an additional 600,000 shares was exercised in full, indicating strong demand.
  • 3Proceeds are primarily earmarked to fund a substantial portion of pending Midland Basin acreage acquisitions for $437.8 million.
  • 4The acquisition targets approximately 15,940 gross (11,948 net) acres in northwest Howard County, Permian Basin.
  • 5The offering was conducted under an effective automatic shelf registration statement on Form S-3.
  • 6Pending acquisition funding, proceeds will be used to temporarily repay debt under the company's revolving credit facility.
  • 7The underwriting agreement includes customary representations, warranties, indemnification provisions, and termination clauses.

Frequently Asked Questions

The primary purpose of the stock offering was to raise capital to fund a significant portion of Diamondback Energy's pending acquisitions of approximately 15,940 gross acres (11,948 net acres) in the Midland Basin, Permian Basin.

Diamondback Energy raised approximately $333.4 million in net proceeds from the offering after deducting underwriting discounts, commissions, and estimated offering expenses.

If the pending acquisitions are not consummated or if the purchase price is reduced, any remaining net proceeds will be used to repay borrowings under the company's revolving credit facility, fund exploration and development activities, or for general corporate purposes, which may include further acquisitions or working capital.

The underwriting agreement with Credit Suisse Securities (USA) LLC involved the sale of 4 million shares at $72.53 per share, with an option for an additional 600,000 shares. It includes standard provisions such as representations, warranties, indemnification by Diamondback Energy, and termination clauses.