MIDLAND, Texas, Sept. 3, 2013 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (Nasdaq:FANG) ("Diamondback") today announced that it has entered into a definitive agreement with an unrelated third party seller to purchase mineral interests under approximately 15,000 gross (12,500 net) acres in Midland County for approximately $440 million, subject to certain adjustments. More than half of these minerals are operated by Diamondback. The proposed transaction is expected to close by the end of September 2013, subject to completion of due diligence and satisfaction of closing conditions. Diamondback intends to finance the acquisition with debt and cash on hand.
"I am tremendously excited about this pending minerals acquisition in Midland County as it offers a unique opportunity for Diamondback stockholders to expand their exposure to what we believe to be one of the most prolific basins in North America," said Travis Stice, Diamondback's Chief Executive Officer. "We expect the value of owning minerals to show up in our results immediately upon completion of this acquisition. These assets should add approximately 1,500 boe/d of production at closing and the last reported free cash flow of approximately $3.5 million in June. Because these are mineral interests, there will be no additional capital expenditures or operating expenses beyond our initial acquisition costs. Netbacks per barrel of oil equivalent were approximately $76/boe in June (blended commodity price less taxes), with no capital expenditure associated with them. Given what we know about the continued pace of development of this acreage, we forecast 2014 free cash flow from these mineral interests of $70 to $80 million based on current prices. The long life of this free cash flow stream should continue to increase further in the future as additional horizontal zones, including not only the Wolfcamp "B", but also Wolfcamp benches in the "A", "C" and Cline along with both the middle and lower Spraberry shales, are developed. This area is among Diamondback's most prolific and economically attractive acreage. This transaction should also increase netbacks, reduce our breakeven costs and enhance the free cash flow profile of Diamondback for our stockholders."
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