8-KMaterial AgreementsFinancial EventsOther Events+1

Diamondback Energy, Inc. 8-K Report, Material Agreement (Mar 24, 2021)

Filed March 24, 2021For Securities:FANG

Summary

Diamondback Energy, Inc. (FANG) has filed an 8-K detailing significant financing activities and debt management. The company successfully issued $2.2 billion in new senior notes across three tranches: $650 million of 0.900% Senior Notes due 2023, $900 million of 3.125% Senior Notes due 2031, and $650 million of 4.400% Senior Notes due 2051. This offering was made under their existing shelf registration statement and was facilitated by a large syndicate of underwriters. Concurrent with the notes offering, Diamondback also completed substantial tender offers for its own 5.375% Senior Notes due 2025 and for various QEP Resources, Inc. notes (5.375% due 2022, 5.250% due 2023, and 5.625% due 2026). The company accepted and paid for a significant portion of these tendered notes using proceeds from the new notes issuance, totaling over $2.1 billion. Additionally, Diamondback obtained the necessary consents to amend the indentures for the QEP notes, eliminating most restrictive covenants and certain events of default.

Key Highlights

  • 1Issued $2.2 billion in new senior notes: $650M of 0.900% due 2023, $900M of 3.125% due 2031, and $650M of 4.400% due 2051.
  • 2The new notes are senior unsecured obligations, guaranteed by Diamondback O&G LLC, but effectively subordinated to secured debt and structurally subordinated to other subsidiaries' debt.
  • 3Successfully completed tender offers for approximately $367.8 million of its own 5.375% Senior Notes due 2025.
  • 4Aggressively redeemed approximately $1.55 billion of QEP Resources, Inc. senior notes across three series (due 2022, 2023, and 2026) through tender offers.
  • 5The aggregate purchase price for all tendered notes was approximately $2.11 billion, funded by the proceeds from the new notes offering.
  • 6Obtained necessary consents to amend QEP Resources, Inc. indentures, removing substantially all restrictive covenants and certain events of default.
  • 7The new notes contain customary investment grade covenants, including limitations on liens and asset sales, and a change of control provision requiring repurchase at 101% of principal.

Frequently Asked Questions

This filing announces Diamondback Energy's entry into material definitive agreements related to a substantial notes offering and the completion of tender offers for existing debt, including its own notes and those of its subsidiary QEP Resources, Inc. It also details amendments made to the QEP debt indentures.

Diamondback issued $2.2 billion in aggregate principal amount of new senior notes: $650 million of 0.900% Senior Notes due March 24, 2023; $900 million of 3.125% Senior Notes due March 24, 2031; and $650 million of 4.400% Senior Notes due March 24, 2051. These notes are senior unsecured obligations, guaranteed by Diamondback O&G LLC.

The proceeds from the new notes offering were primarily used to fund the redemption of tendered existing debt. This included its own 5.375% Senior Notes due 2025 and significant amounts of QEP Resources, Inc.'s senior notes (due 2022, 2023, and 2026).

By obtaining the requisite consents, Diamondback has amended the indentures for the QEP notes to eliminate most restrictive covenants and certain events of default. This simplifies financial flexibility and reduces compliance burdens associated with the acquired QEP debt.