8-KMaterial AgreementsRegulation FDOther Events+1

Diamondback Energy, Inc. 8-K Report, Material Agreement (Jul 18, 2016)

Filed July 18, 2016For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) filed an 8-K on July 18, 2016, detailing a significant equity offering and a strategic acquisition. The company successfully completed a public offering of approximately 5.5 million shares of common stock, with underwriters exercising their option for an additional 825,000 shares, raising roughly $551.7 million in net proceeds. These funds are primarily earmarked to finance a pending acquisition. The company also announced a definitive purchase agreement to acquire leasehold interests in Reeves, Ward, and Pecos counties, Texas, in the Southern Delaware Basin for approximately $560 million. This acquisition includes substantial acreage, producing wells, and infrastructure, aiming to significantly expand Diamondback's operational footprint. The transaction is expected to close in September 2016, subject to customary closing conditions and due diligence.

Key Highlights

  • 1Completion of a $551.7 million net proceeds common stock offering, including full exercise of the underwriters' option for additional shares.
  • 2Agreement to acquire leasehold interests in the Southern Delaware Basin (Reeves, Ward, Pecos counties, Texas) for $560.0 million.
  • 3The acquisition comprises 19,180 net acres, 30 gross producing wells (vertical and horizontal), and related infrastructure.
  • 4Net proceeds from the offering are intended to fund the pending acquisition, with remaining funds for exploration, development, and general corporate purposes.
  • 5The acquisition is expected to close in September 2016, pending due diligence and closing conditions.
  • 6The offering was made under Diamondback Energy's effective shelf registration statement on Form S-3.
  • 7The company also announced an increased 2016 production outlook and provided an operational update via press release.

Frequently Asked Questions

The primary purpose of the stock offering was to raise approximately $551.7 million in net proceeds to finance the acquisition of leasehold interests in the Southern Delaware Basin.

Diamondback E&P agreed to purchase leasehold interests in Reeves, Ward, and Pecos counties, Texas, for $560.0 million. This includes 19,180 net acres, 30 gross producing wells, and associated infrastructure. The acquisition is expected to close in September 2016.

Based on seller information, the acquired acreage has an estimated net production of approximately 1,000 BOE/d. Diamondback Energy's internal estimates as of July 1, 2016, indicated approximately 2.2 MMBOE in net proved reserves, though this estimate has not been independently verified and may be revised.

If the acquisition is not consummated or if the purchase price is reduced, Diamondback Energy intends to use any net proceeds to fund a portion of its exploration and development activities and for general corporate purposes, which may include acquisitions and working capital.