Diamondback Energy announced on Tuesday that it has agreed to acquire certain units of energy producer Double Eagle, backed by EnCap Investments, in a cash-and-stock deal valued at approximately $4.08 billion. This acquisition is part of Diamondback’s strategy to bolster its footprint in the oil-rich Permian Basin, a key region for shale oil production.
The deal will provide Diamondback with access to about 40,000 net acres in the Midland Basin, one of the most prolific areas of the Permian. The company has been focused on expanding its holdings in the region, having already acquired Endeavour Energy Partners in a $26 billion deal last year, which made it the third-largest oil and gas producer in the basin.
Despite this expansion, growth in oil output in the Permian is expected to slow by at least 25% in 2025, as producers are increasingly focused on controlling spending while striving for higher prices for their oil and gas. This marks a shift in priorities, especially after President Donald Trump’s calls for increased domestic oil production.
In addition to the acquisition, Diamondback has committed to selling at least $1.5 billion of non-core assets to reduce its debt. The company plans to lower its net debt to $10 billion, with a long-term leverage target of between $6 billion and $8 billion. The acquisition, which will be funded through a mix of cash and borrowings, is expected to close on April 1.
Diamondback CEO Travis Stice highlighted the strategic value of the Double Eagle assets, noting that the 407 locations adjacent to their core position in the Midland Basin add valuable, largely undeveloped inventory.
Diamondback’s shares were up by over 1% in pre-market trading following the announcement.
