01—Abstract
Summary
Summary of the 8-K/A filed April 7, 2025. Cited figures are marked; the original filing is the authoritative source.
On April 7, 2025, Diamondback Energy filed a Form 8-K to supplement its September 2024 acquisition of Endeavor Parent, LLC, which closed September 10, 2024.
The filing provides an unaudited pro forma combined statement of operations for fiscal 2024, as if the deal had closed January 1, 2024. The acquisition was funded with approximately $7.1 billiona in cash (excluding Viper Energy cash), 117.27 million newly issued shares, and a $1.0 billion term loan. The filing contains no new operating guidance, reserve data, or capital allocation announcements, and management states the pro forma figures are not indicative of actual results or future performance.
On a pro forma basis, combined revenue for 2024 would have been about $15.5 billionb, up roughly 40% from Diamondback's historical $11.1 billion. Pro forma income from operations would have been $6.2 billion, compared with $4.4 billion historically. Depreciation, depletion, amortization and accretion rises to $4.2 billion from $2.85 billion, reflecting the fair-value step-up of acquired oil and gas properties under the full cost method.
Pro forma net income attributable to Diamondback falls to $3.06 billionc from $3.34 billion, and diluted EPS falls to $10.32 from $15.53. The EPS decline is driven mainly by the 38% increase in weighted average shares, which rises to 294.6 million from 213.5 million, along with higher depletion and income tax expense. The pro forma tax provision of $2.86 billion (vs. $0.80 billion historically) largely reflects Endeavor's conversion to a C-corporation effective January 1, 2024, which triggered a deferred tax liability and income tax expense of roughly $1.6 billion.
Merger and integration expenses of $718 milliond are also included, and the statement excludes any expected cost synergies or future integration costs. Investors should treat the document mainly as an accounting reconciliation of the deal's effects rather than a forecast of Diamondback's future earnings.
02—Key points
Key Highlights
- Pro forma 2024 revenue of $15.5 billion versus $11.1 billion reported historically, reflecting the inclusion of Endeavor's operations as if the deal had closed January 1, 2024.
- Pro forma diluted EPS of $10.32 versus $15.53 historically, a decline of about 34%, driven by 117.27 million new shares issued to Endeavor holders and higher depletion and taxes.
- Pro forma DD&A of $4.25 billion versus $2.85 billion, including a $1.4 billion depletion adjustment for the fair value of acquired oil and gas properties under full cost accounting.
- Pro forma income tax provision of $2.86 billion versus $0.80 billion, largely due to a roughly $1.6 billion one-time deferred tax charge from Endeavor's conversion to a C-corporation.
- Acquisition consideration of approximately $7.1 billion in cash plus 117.27 million shares, funded by cash on hand and a $1.0 billion term loan at 6.58%.
- Pro forma net interest expense of $166 million, with management estimating that a 1/8 percentage point change in SOFR or the weighted average note coupon would move annual interest expense by about $8 million.
- Filing contains no new guidance, synergy estimates, or reserve updates; the pro forma statement explicitly excludes expected cost savings and integration costs.
03—Questions
Frequently Asked Questions
How much did the Endeavor acquisition change Diamondback's 2024 revenue and earnings on a pro forma basis?
Pro forma 2024 revenue would have been about $15.5 billion, up from $11.1 billion reported. Pro forma net income attributable to Diamondback would have been $3.06 billion, down from $3.34 billion, and diluted EPS would have been $10.32, down from $15.53. Revenue rose while earnings fell, mainly because of higher depletion, higher income taxes, and a much larger share count.
Why does pro forma EPS fall so sharply even though revenue grows?
The weighted average share count rises to 294.6 million from 213.5 million because of the 117.27 million shares issued to Endeavor holders. Net income also declines slightly, with pro forma DD&A up about $1.4 billion and the pro forma tax provision up about $2.1 billion, partly offset by higher operating income. Together these outweigh the revenue gain on a per-share basis.
What is the Endeavor-related tax charge, and is it recurring?
Effective January 1, 2024, Endeavor converted from a pass-through entity to a C-corporation and recorded a deferred tax liability and income tax expense of approximately $1.6 billion. This is a one-time, non-cash accounting charge tied to the conversion and the difference between book and tax bases of its assets, not an ongoing operating cost. Its effect is embedded in the pro forma 2024 tax provision of $2.86 billion.
Does this filing provide forward-looking guidance or synergy expectations?
No. The filing presents only historical and pro forma 2024 results prepared under Article 11 of Regulation S-X. Management explicitly states the statement does not project future results and excludes any cost savings from operating efficiencies or synergies, as well as integration costs incurred after the deal closed. Investors should look to Diamondback's other filings and earnings materials for forward-looking information.
How was the acquisition financed, and what is the balance sheet impact?
The cash portion of about $7.1 billion came from cash on hand (excluding Viper Energy's cash) and $1.0 billion of borrowings under a term loan dated February 29, 2024, at an interest rate of 6.58%. The deal also included 117.27 million new Diamondback common shares. The added interest expense from the term loan and $5.5 billion of April 2024 senior notes is reflected in the pro forma statement, net of additional capitalized interest of $261 million.
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