Midland-based Diamondback Energy said Monday it is acquiring QEP Resources and Guidon Operating. The transactions will strengthen Diamondback’s position in Midland Basin and bring Diamondback’s total leasehold interests to more than 276,000 net surface acres with annual savings of at least $60 million from efficiencies. CEO Travis Stice said, “Diamondback does not need to participate in industry consolidation to simply get bigger. We participate in corporate development opportunities that we firmly believe will increase the long-term value of our stockholders’ investment.” He said the acquisitions “check every box of Diamondback’s corporate development strategy.”
The all-stock transaction of QEP is valued at about $2.2 billion, including debt of $1.6 billion. Denver-based QEP held 49,000 net acres in Midland Basin; its 2020Q3 average production was 48.3 million b/d of oil (76.7 million boed) with 30.5 million b/d of oil and 47.6 million boed in Permian. QEP’s Williston assets will be considered non-core and will be used to harvest cash flow or be divested.
Diamondback will acquire all leasehold interests and related assets of Guidon for 10.63 million shares of Diamondback common stock and $375 million of cash. Irving-based Guidon held 32,500 net acres in northern Midland Basin with 2020Q3 production of 11.6 million b/d of oil (17.9 million boed). There are an estimated 395 gross horizontal locations (324 net). Stice added, “Diamondback will not only get bigger through this transaction, but most importantly better.”
Enverus Intelligence said, “Deal rationale ticks the same boxes as previous transactions – complementary positions create synergies, amplify accretion on increasingly important cash flow metrics, and add scale to maintain market relevance.” Closing of both deals is expected in 2021Q1.
Takeover are hurting the little operators