Diamondback to buy Permian assets from FireBird in cash and stock deal
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Diamondback Energy (NASDAQ:FANG) said Tuesday it agreed to acquire all leasehold interest and related assets of closely-held FireBird Energy for 5.86M common shares and $775M in cash; the cash outlay at closing is expected to total ~$700M due to expected free cash flow to be generated on the asset until the expected close late in Q4.
The deal adds 75K gross highly contiguous acres in the Midland Basin with estimated production at closing of 22K boe/day.
Diamondback (FANG) said the bolt-on acquisition is "accretive on all relevant 2023 and 2024 financial metrics, immediately increasing expected per share returns to our stockholders in the near-term while also improving the long-term duration of the company's cash return profile."
The company also said it remains committed to returning at least 75% of free cash flow to stockholders, and announced a target to sell at least $500M of non-core assets by year-end 2023, with proceeds earmarked for further debt reduction.
Diamondback Energy's (FANG) "low debt and above-average profitability minimize investment risk," Long Player writes in an analysis published recently on Seeking Alpha.