Diamondback Energy Inc. rounded off a tumultuous year for the U.S. shale industry with the acquisition of two rival producers that will expand the company’s position in the Permian Basin. The acquisitions are a bet by Midland, Texas-based Diamondback on the resilience of the shale sector, whose production has dropped this year following the collapse of oil prices.
Diamondback Energy and QEP Resources announced that they have entered into a definitive agreement under which Diamondback will acquire QEP in an all-stock transaction valued at approximately $2.2 billion, including QEP’s net debt of $1.6 billion as of September 30, 2020. The consideration will consist of 0.05 shares of Diamondback common stock for each share of QEP common stock, representing an implied value to each QEP stockholder of $2.29 per share based on the closing price of Diamondback common stock on December 18, 2020. The transaction was unanimously approved by the Board of Directors of each company.
Upon closing the transaction and excluding the impact of shares to be issued in the previously announced acquisition of assets from Guidon, Diamondback stockholders will own approximately 92.8% of the combined company, and QEP stockholders will own approximately 7.2%.
The transaction has been unanimously approved by the Boards of Directors of Diamondback and QEP and is expected to be completed in the first quarter or early in the second quarter of 2021, subject to the approval of QEP stockholders, the satisfaction of certain regulatory approvals and other customary closing conditions. Upon closing, Diamondback’s Board of Directors and executive team will remain unchanged. Additionally, the Company will continue to be headquartered in Midland, Texas.
Diamondback said it agreed to purchase closely held Guidon Operating LLC. That cash-and-stock deal values Guidon, which was co-founded in 2016 by funds managed with Blackstone Group, at about $862 million.