8-KMaterial AgreementsFinancial EventsOther Events+1

Diamondback Energy, Inc. 8-K Report, Material Agreement (May 26, 2020)

Filed May 26, 2020For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) announced the completion of its underwritten public offering of $500 million in aggregate principal amount of 4.750% Senior Notes due 2025. These notes are senior unsecured obligations, guaranteed by Diamondback O&G LLC, and rank equally with existing senior indebtedness but are effectively subordinated to secured debt. The issuance is intended to provide funding for the company's operations and strategic initiatives, including the financing of a tender offer. In conjunction with the note offering, Diamondback's subsidiary, Energen Corporation, concluded its cash tender offer for its 4.625% Senior Notes due 2021. A significant portion, $208.7 million (52.17%), of these notes were tendered and accepted for payment, with the funding derived from an equity contribution from Diamondback, which in turn was funded by the proceeds from the new note issuance. Notes not tendered in the Energen offer remain outstanding. This action represents a proactive approach to managing debt maturities and optimizing the company's capital structure amidst evolving market conditions.

Key Highlights

  • 1Completion of a $500 million public offering of 4.750% Senior Notes due 2025.
  • 2Notes are senior unsecured obligations of Diamondback Energy, guaranteed by Diamondback O&G LLC.
  • 3New notes rank equally with existing senior indebtedness but are effectively subordinated to secured debt.
  • 4Proceeds from the note offering were used to fund an equity contribution to Energen Corporation.
  • 5Energen Corporation's tender offer for its 4.625% Senior Notes due 2021 expired, with approximately 52.17% ($208.7 million) tendered and accepted.
  • 6Notes not tendered in the Energen offer remain outstanding.
  • 7The company may redeem the notes prior to maturity, with specific provisions for a 'Change of Control Triggering Event'.

Frequently Asked Questions

The proceeds from the $500 million senior notes offering were primarily used to fund an equity contribution to Energen Corporation. This equity contribution was then used to finance Energen's cash tender offer for its outstanding 4.625% Senior Notes due 2021.

Energen Corporation's tender offer for its 4.625% Senior Notes due 2021 expired with $208.7 million (52.17%) of the notes being tendered and accepted for payment. The notes that were not tendered in the offer remain outstanding.

The new notes are senior unsecured obligations of Diamondback Energy and are guaranteed by Diamondback O&G LLC. They rank equally with the company's and the guarantor's existing and future senior indebtedness. However, they are effectively subordinated to any secured indebtedness to the extent of the collateral securing such debt, and structurally subordinated to the indebtedness of subsidiaries other than the guarantor.

Yes, Diamondback Energy has the option to redeem the notes in whole or in part at certain times prior to maturity. There is a 'par call date' (April 30, 2025), one month before maturity, after which the notes can be redeemed at 100% of the principal amount plus accrued interest. Additionally, under a 'Change of Control Triggering Event,' noteholders have the right to require the company to purchase their notes at 101% of the principal amount plus accrued interest.