MIDLAND, Texas, July 13, 2016 (GLOBE NEWSWIRE) — Diamondback Energy, Inc. (NASDAQ:FANG) (“Diamondback” or the “Company”) today announced that it has entered into a definitive purchase agreement with an unrelated third party seller to acquire leasehold interests and related assets in the Southern Delaware Basin for an aggregate purchase price of$560 million, subject to certain adjustments. Upon completion, the pending acquisition will provide Diamondback with primarily operated leasehold interests, the majority of which are located along the Pecos River in Reeves and Ward counties, Texas.
- 19,180 net surface acres primarily in Reeves and Ward counties
- Approximately 1,000 boe/d of current net production based on data provided from the seller
- Net proved developed reserves, based on internal estimates as of July 2016, were approximately 2.2 MMboe
- 290 net identified potential horizontal drilling locations across four zones with additional upside potential in other zones and through downspacing
- Contiguous position supports average lateral lengths of approximately 9,500 feet
- Salt water disposal (“SWD”) infrastructure and additional assets valued at $10 to $15 million
ENTERING THE DELAWARE BASIN THROUGH ACCRETIVE ACQUISITION
Diamondback has entered into a definitive purchase agreement to acquire from an unrelated third party seller approximately 38,765 gross (19,180 net) acres in the Southern Delaware Basin and related assets for $560 million, subject to certain adjustments. The transaction, which is expected to close in September 2016, marks Diamondback’s entry into the Southern Delaware Basin and will bring total leasehold to approximately 105,000 net acres, assuming all acreage is acquired.
The assets, primarily located along the Pecos River in Reeves and Ward counties, include approximately 1,000 boe/d of current net production based on data provided by the seller. The acreage has production from 19 gross producing vertical wells and 11 gross producing horizontal wells. Net proved developed reserves, based on Diamondback’s internal estimates as ofJuly 1, 2016, were approximately 2.2 MMboe. The Company’s estimate of proved developed reserves is based on analysis of production data provided by the sellers, as well as available geologic and other data, and the Company may revise its estimates following ownership of these properties.
Recent horizontal wells in the surrounding area have confirmed geochemical data that indicates the three primary targets (Wolfcamp A, Wolfcamp B and 3rd Bone Spring) are within the over-pressured oil window. Diamondback believes that development potential within the footprint of the acquisitions includes 290 net horizontal locations, based on 880 foot inter-lateral spacing in the Wolfcamp A and B and 1,320 foot inter-lateral spacing in the 2nd and 3rd Bone Spring. Additional development potential may exist in the Bone Spring and Wolfcamp as well as through additional downspacing.
The contiguous and undeveloped nature of the acreage is conducive for efficient development. Diamondback believes that the identified potential horizontal locations are conducive to more capital efficient longer laterals with an average of 9,500 feet. Existing saltwater disposal and gathering infrastructure along with other assets are valued at $10 to $15 million. Based on petrophysical analysis of open hole logs, the Company believes that the acreage may have significantly more potential oil in place through the Wolfcamp B than in theNorthern Midland Basin.
Diamondback intends to finance the acquisitions, subject to market conditions and other factors, through a combination of cash on hand and proceeds from one or more capital markets transactions, which may include debt or equity offerings.
The acquisition is expected to close in September 2016; however, the transaction remains subject to completion of due diligence and satisfaction of other closing conditions, and there can be no assurance that the transaction will be completed as planned or at all.