8-KMaterial AgreementsOther EventsExhibits & Filings

Diamondback Energy, Inc. 8-K Report, Material Agreement (Dec 20, 2016)

Filed December 20, 2016For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) announced significant financing activities through an 8-K filing on December 19, 2016, detailing a common stock offering and a senior notes issuance. These transactions, which closed on December 20, 2016, raised substantial capital to fund the acquisition of oil and natural gas assets from Brigham Resources Operating, LLC and Brigham Resources Midstream, LLC. The company successfully issued approximately $1.15 billion in common stock, including the full exercise of underwriters' options, and $500 million in senior notes. These strategic moves underscore Diamondback Energy's aggressive growth strategy and its commitment to expanding its asset base. The capital raised is primarily earmarked for the Brigham acquisition, indicating a significant operational expansion for the company. Additionally, the filing highlights an amendment to the company's credit agreement, increasing its permitted unsecured senior notes issuance capacity from $750 million to $1.0 billion, providing further financial flexibility.

Key Highlights

  • 1Diamondback Energy completed a common stock offering of 10,500,000 shares at $95.3025 per share, generating proceeds of approximately $1.15 billion (net of expenses and discounts).
  • 2Underwriters fully exercised their option to purchase an additional 1,575,000 shares, bringing the total common stock offering to 12,075,000 shares.
  • 3The company also issued $500 million in 5.375% Senior Notes due 2025 through a private placement.
  • 4Proceeds from both the stock and note offerings are intended to fund the cash consideration for the pending acquisition of oil and natural gas assets from Brigham Resources.
  • 5A fourth amendment to Diamondback's credit agreement was executed, increasing its permitted unsecured senior notes issuance ceiling from $750 million to $1.0 billion.
  • 6The common stock offering was made under an effective automatic shelf registration statement on Form S-3.
  • 7The transactions closed on December 20, 2016.

Frequently Asked Questions

The primary purpose of both the common stock offering and the senior notes issuance was to raise capital to fund the cash consideration for Diamondback Energy's pending acquisition of oil and natural gas assets from Brigham Resources Operating, LLC and Brigham Resources Midstream, LLC.

Diamondback Energy raised approximately $1.15 billion from the common stock offering (net of expenses) and $500 million from the senior notes offering, totaling approximately $1.65 billion.

The Fourth Amendment to the Credit Agreement increases Diamondback Energy's permitted unsecured senior notes issuance capacity from $750 million to $1.0 billion. This provides the company with greater financial flexibility for future debt issuances and potential acquisitions or development activities.

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