Diamondback Energy signs $9.2bn deal to buy Energen

Diamondback Energy has signed an agreement to acquire US oil and gas exploration and production company Energen in a $9.2bn deal.

The total consideration also includes Energen’s net debt of $830m.

Under the terms of the agreement, Diamondback will issue 0.6442 common stock shares for each share of Energen common stock.

Once the transaction is completed, Diamondback shareholders will own 62% of the combined entity, while Energen shareholders will hold 38%.

The company will acquire 96,000 net acres in the Permian Basin, as well as 179,000 net acres across the Midland and Delaware basins from Energen.

Diamondback Energy CEO Travis Stice said: “This transaction represents a transformational moment for both Diamondback and Energen shareholders as they are set to benefit from owning the premier large-cap Permian independent with industry-leading production growth, operating efficiency, margins and capital productivity supporting an increasing capital return programme.

“The Energen team has done an outstanding job assembling a portfolio of Tier One acreage in both the Midland and Delaware basins, which, when combined with Diamondback’s current portfolio, will present an extended runway for Diamondback’s record of best-in-class execution and low-cost operations.

“The combined company’s expected production growth, capital productivity and cost structure will enhance our free cash flow profile to grow our long-term capital return programme.”

Earlier this month, Diamondback reached a deal to purchase Ajax Resources for $900m in cash and 2.58 million shares of common stock.

The transactions will allow the company to have 266,000 net acres in the Permian Basin and more than 7,000 estimated total net horizontal Permian locations.

The acquisitions represent combined pro forma production of more than 222Mboe/d in the second quarter of this year.

Diamondback expects the Energen transaction to offer synergies with a net present value of $3bn.

Subject to the approval of shareholders and other conditions, including regulatory approvals, the completion of the acquisition is scheduled to take place by the end of the fourth quarter of this year.