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    Diamondback Energy To Acquire Lario Permian From Lario Oil & Gas For US$1.55 Billion


    November 17, 2022 - Marketline - Deals

     

      Diamondback Energy To Acquire Lario Permian From Lario Oil & Gas For US$1.55 Billion

      Deal In Brief

      Diamondback Energy Inc, an independent oil and natural gas company, has entered into a definitive purchase agreement to acquire all leasehold interest and related assets of Lario Permian LLC, from Lario Oil & Gas Company, and certain associated sellers, for a purchase consideration of approximately US$1,548 million

      The consideration will be paid in the combination of US$850 million in cash and through issuance of 4.18 million shares of Diamondback common stock at an assumed price of US$167.03 per share. The cash portion of this transaction is expected to be funded through a combination of cash on hand, borrowings under the Company’s credit facility and/or proceeds from a senior notes offering. The oil and gas assets of Lario Permian includes all leasehold interest and related assets approximately 25,000 gross (15,000 net) acres (93% of acreage is operated with an average 86% working interest; 92% of acreage currently held by production) in the core of the Northern Midland Basin, estimated average production for full year 2023 is of approximately 18 mbo/d (25 mboe/d), 154 estimated gross (132 net), horizontal locations in primary development targets with an average lateral length of over 9,400 feet; includes 20 DUCs, Primary targets of the assets are the Middle Spraberry, Jo Mill, Lower Spraberry, Wolfcamp A and Wolfcamp B formations, 28 gross upside locations in the Wolfcamp D based on recent well results

      Jefferies LLC is serving as financial advisor to Diamondback, J.P. Morgan Securities LLC is serving as financial advisor to Lario and the associated sellers and Kirkland & Ellis LLP is serving as legal advisor to Diamondback, Vinson & Elkins LLP and Boigon Law Ltd are serving as legal advisors to Lario and the associated sellers

      The transaction is expected to close on January 31, 2023, subject to customary closing conditions and adjustments

      “Lario is an attractive bolt-on to our existing Martin County position, home to some of the best rock in the Permian Basin,” stated Travis Stice, Chairman and Chief Executive Officer of Diamondback. “This is a deal that checks all the boxes Diamondback looks for in an acquisition, as it brings over 150 gross locations in the core of the Northern Midland Basin and also provides immediate accretion to all relevant financial metrics, enhancing Diamondback’s overall value proposition to our stockholders. When combined with our pending FireBird acquisition, we will grow our Midland Basin footprint by approximately 83,000 net acres, add 500 high quality drilling opportunities that compete for capital with our current development plan and increase our 2023 production profile by approximately 37 MBo/d (50 MBoe/d). Our enhanced size and scale in the Midland Basin, along with our low-cost operations, puts us in an advantageous position to deliver differentiated near-term and long-term returns to our stockholders.” The transaction implies a value of US$61,920 per net acre of land.

      Deal Value (US$ Million) 1548
      Deal Type Acquisition
      Sub-Category 100% Acquisition
      Deal Status Announced: 2022-11-16

      Deal Participants

      Target (Company) Lario Permian Llc
      Acquirer (Company) Diamondback Energy, Inc.
      Vendor 1 (Company) Undisclosed Company
      Vendor 2 (Company) Lario Oil & Gas Company

      Deal Rationale

      The transaction will enable Diamondback Energy to expand its oil and gas assets base in the US.

      % Acquisition 100%

      (Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Marketline shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.)

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