Diamondback Energy (NASDAQ:FANG) agrees to acquire Brigham Resources and Brigham Resources Midstream for $2.43B, consisting of $1.62B in cash and 7.69M common shares.
The deal includes 76.3K net leasehold acres in the highest oil content region of the Delaware Basin, with 48 producing horizontal wells; upon completion, FANG says its leasehold interests in the Permian Basin would total ~182K net surface acres.
To help fund the deal, FANG launches a 10.5M-share public offering, with an underwriters option to purchase up to an additional 1.575M common shares, and a debt offering of $250M aggregate principal amount of senior notes due 2025.
SM Energy (SM +1.5%) surged to a 52-week high at the open before pulling back following news of its purchase of 35.7K acres in the Midland Basin in west Texas for $1.1B in cash and 13.4M shares valued at ~$500M.
SM expects to use the proceeds from a $785M sale of property and other assets in the Williston Basin to Oasis Petroleum, also announced today, to pay for the bulk of its cash outlay for the deal.
“Our Permian growth rate will be huge, higher than our more highly valued competitors,” SM CEO and President Jay Ottoson says without naming the competitors, but the company’s slide presentation lists Diamondback Energy (FANG -0.5%), Callon Petroleum (CPE -0.1%), Parsley Energy (PE -0.5%) and RSP Permian (RSPP -1.1%) as its top peers in the area.
CapitalOne upgrades SM to Overweight from Equal Weight with a $50 price target, lifted from $46, as it estimates SM paid ~$42K/acre for the acreage when backing out 2.4M boe/day production from the total $1.6B purchase price.
Williams Capital considers SM its top pick in the sector, saying the deal gives it "the scale to command an improved valuation and trade more like a Permian Basin company, especially when considering its execution of selling non-core assets."
RSP Permian (NYSE:RSPP) -5.8% AH after agreeing to acquire Silver Hill Energy Partners and Silver Hill E&P II for $1.25B in cash and 31M common shares of its common stock, implying a total purchase price of ~$2.4B.
RSPP says the deal is a unique acquisition of a highly contiguous acreage position in the core of the Delaware Basin with 41K net surface acres, which creates substantial scale with combined current production of ~50K boe/day, 100K-plus net surface acres, 500K-plus net effective horizontal acres, and 3,600 net drilling locations with substantial additional upside.
To help fund the deal, RSPP launches a 20M-share public offering, with an underwriters option to purchase up to an additional 3M common shares.
Silver Hill reportedly had attracted interest from the likes of Diamondback Energy (NASDAQ:FANG), Noble Energy (NYSE:NBL), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY).
Diamondback Energy (NASDAQ:FANG) is close to a deal to buy privately held Silver Hill Energy Partners in a deal that could fetch ~$2.5B, WSJ reports.
FANG would be the winner of an auction that reportedly attracted interest from Noble Energy (NYSE:NBL), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY), in the latest rush to grab drilling land in west Texas' Permian Basin.
A deal could be announced as soon as next week, according to the WSJ report.
Tudor Pickering & Holt analysts say EOG is paying $7K-$8K/acre for the Delaware Basin properties, assuming a value on proven reserves that are producing and still being developed of ~$800M for the 29.6M boe/day EOG said it is picking up (48% oil).
Simmons analyst Pearce Hammond calculates that the deal comes in well below some recent transactions in the play, including Diamondback Energy's (FANG +0.1%) $560M purchase of Luxe Energy, which he says came in at $26K-$27K/acre.
Diamondback Energy (NASDAQ:FANG) -2.1% premarket after agreeing to acquire more than 19K net acres and related assets in the Southern Delaware Basin for $560M.
The assets, primarily located along the Pecos River in Reeves and Ward counties, include ~1K boe/day of current net production.
FANG also raises its 2016 production guidance to 38K-40K boe/day, up 11% from the midpoint of earlier guidance of 32K-38K boe/day, due to increasing activity from 3-4 rigs in H2 2016 as well as continued strong well performance.
FANG now plans to complete 60-75 gross horizontal wells this year, vs. its prior outlook for 35-70 gross horizontal wells; as a result, the company raises its 2016 capex guidance to $350M-$425M from $250M-$375M prior.
To help fund the deal, FANG announces a public offering of 5.5M common shares, with an underwriters option to purchase up to an additional 825K shares.
Encana’s (ECA +2.3%) takeover of Athlon Energy (ATHL +24.6%) is good news for Diamondback Energy (FANG +2.3%) and Energen (EGN +2.2%), according to analysts at Sterne Agee.
The acquisition implies a value of $98/share for FANG, Sterne says, based on FANG's 85K net acre leasehold position, estimated 19.8K boe/day of Q3 production, $585M of assumed debt, and a $1.7B market value for the Viper Energy Partners (NASDAQ:VNOM) units it owns.
The firm sees even more upside for EGN, as ECA’s price implies a value of $102/share for EGN, based on 180K net acres across both sides of the Permian Basin, 48K boe/day of Q3 Permian Basin production, 132M cfe/day of Q3 San Juan Basin, and $835M of pro forma net debt as of Sept. 30.
Permian producers Laredo Petroleum (LPI +5%), Parsley Energy (PE +5%) and RSP Permian (RSPP +4.8%) also are higher following the acquisition news.
Diamondback Energy (NASDAQ:FANG) -1.9% premarket agrees to acquire leasehold interests in Texas' Midland Basin from unnamed sellers for a combined $538M.
FANG says the acquisition includes 14,773 gross acres with net production of ~2,173 boe/day in May from 131 gross producing wells; net proved reserves are ~5.2M boe; FANG expects the deal to add 13,136 net acres to its total position in the Midland Basin, increasing it to more than 85K net acres.
To fund the deal, FANG plans to launch of a public offering of 5M common shares; the underwriters will have an option to purchase up to an additional 750K shares.
FANG also raises its projected FY 2014 daily production by another 1K to a new range of 17K-19K boe/day, not including any volumes from the Midlands Basin purchase.