Summary
Diamondback Energy, Inc. (FANG) announced on October 20, 2016, its intention to offer $500 million in aggregate principal amount of Senior Notes due 2024. The primary purpose of this offering is to fund the repurchase of its outstanding 7.625% Senior Notes due 2021. This move signals a proactive approach to managing its debt profile and potentially optimizing its capital structure by refinancing existing debt at potentially more favorable terms or with a longer maturity. In addition to the debt offering, the filing provides key operational updates. Diamondback reported a significant 22% increase in average daily production during the third quarter of 2016, reaching 44,923 BOE/d, with 73% being oil. This growth was further supported by an increase in drilling activity, with plans to add a sixth horizontal rig early next year. The company also closed a substantial acquisition in the Southern Delaware Basin, boosting its net acreage to approximately 105,000 acres. These operational achievements, coupled with the proposed debt refinancing, indicate a company focused on growth and deleveraging.
Key Highlights
- 1Proposed $500 million offering of Senior Notes due 2024 to refinance outstanding 7.625% Senior Notes due 2021.
- 2Average daily production increased by 22% to 44,923 BOE/d in Q3 2016 (73% oil).
- 3Average realized oil price in Q3 2016 was $42.11 per barrel.
- 4Viper Energy Partners LP (Viper) Q3 2016 average daily production was 6,255 BOE/d (75% oil).
- 5Diamondback is operating five horizontal drilling rigs and plans to add a sixth in early 2017.
- 6Completed a significant acquisition in the Southern Delaware Basin, increasing net acreage to approximately 105,000 acres.
- 7The notes offering is subject to market conditions and is intended for qualified institutional buyers and certain non-U.S. persons.