HOUSTON (The Deal) -- Midland, Texas, oil and gas explorer Diamondback Energy (FANG) agreed to buy properties for $538 million, boosting its acreage in a hot area of the Permian Basin and delivering a three times return for the private equity backer involved, according to a person close to the situation.
The properties were largely in Midland and western Glasscock Counties, Texas, Diamondback said on Monday. The company didn't name the sellers, but according to a filing with the Securities and Exchange Commission, they included Quantum Energy Partners-backed Rio Oil and Gas LLC, Bluestem Energy LP and Crump Energy along with BC Operating Inc., Crown Oil Partners V LP and Crump Energy Partners V LP and their affiliates.
Quantum tripled its money on the sale, a source close to the situation said.
The deal implies $30,000 to $35,000 per undeveloped acre, the highest range of metrics seen in Midland basin over the past six to 12 months, Tudor, Pickering, Holt & Co. Securities Inc. wrote in a report. However, the firm expects the deal to be modestly accretive to its $100 per share proved, probable and possible net asset value for the company after layering in drilling acceleration and equity financing.
Topeka Capital Markets analyst Gabriele Sorbara said while the acquisition is on the expensive side at $103.46 per proved barrel of oil equivalent, $247,584 per flowing barrel of production and $27,722 per acre (after backing out a value for the acquired production), the acreage is in the core area of the play and accretive to its market metrics.
The 13,136 net acres will boost Diamondback's position in the basin to 85,000 net acres.