The oil and gas industry’s latest consolidation amidst the ongoing COVID-19 pandemic is Monday’s announced $2.2 billion all-stock acquisition of QEP Resources by the Midland, Texas based Permian operator Diamondback Energy, Inc.
Under the deal, Diamondback will also take over QEP’s net debt of $1.6 billion. But it also gets nearly 49,000 net acres in the Midland Basin and 48 current drilled but uncompleted wells.
The pending QEP acquisition, together with the previously announced pending acquisition of assets from Guidon Operating LLC (“Guidon”), will bring Diamondback’s total leasehold interests to over 276,000 net surface acres in the Midland Basin (429,000 Midland and Delaware Basin net acres).
“The acquisition of QEP also checks every box of Diamondback’s corporate development strategy,” stated Travis Stice, Chief Executive Officer of Diamondback. “Most importantly, the addition of this Tier-1 resource competes for capital right away in Diamondback’s current portfolio, and we will now be able to allocate most of our capital to the high-returning Midland Basin for the foreseeable future.”
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.
When Diamondback agreed to buy Guidon, it was for 10.63 million shares of Diamondback common stock and $375 million of cash.