FANG: More than doubling Permian Basin LH

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MIDLAND, Texas, Dec. 14, 2016 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ:FANG) ("Diamondback" or the "Company") today announced that it has entered into a definitive purchase agreement to acquire all leasehold interests and related assets of Brigham Resources Operating, LLC and Brigham Resources Midstream, LLC ("the Sellers" or "Brigham Resources"), for an aggregate purchase price of $2.43 billion, consisting of $1.62 billion in cash and 7.69 million shares of Diamondback common stock, subject to certain adjustments. Upon completion, the pending acquisition will provide Diamondback with primarily operated leasehold interests on 76,319 net acres located in Pecos and Reeves counties, Texas and will bring Diamondback's total leasehold interests to approximately 182,000 net surface acres in the Permian Basin.

ACQUISITION HIGHLIGHTS:

76,319 net leasehold acres in the highest oil content region of the Delaware Basin, which has been de-risked by 48 producing horizontal wells on the acreage
Mineral interests comprised of 1,149 net royalty acres under leasehold acres
November 2016 average net production of 9,482 boe/d (77% oil)
1,213 net identified potential horizontal drilling locations across four proven zones with additional upside potential in multiple other zones and via downspacing
Contiguous position supports average lateral lengths of approximately 8,000 feet based on current leasehold, with multiple opportunities to increase lateral lengths
Significant operating control with approximately 83% of acreage operated and over 81% working interest
Existing infrastructure valued at approximately $50 million; future upside from midstream development
Immediately accretive on acreage and financial metrics
Company will issue approximately 7.69 million shares of Diamondback common stock to the Sellers valued at $809.6 million based on the December 13, 2016 closing price of $105.28
Diamondback intends to finance the cash portion of the purchase price, subject to market conditions and other factors, through a combination of cash on hand and proceeds from one or more capital markets transactions, which may include debt and equity offerings
An effective date of January 1, 2017 with anticipated close at the end of February 2017
"Diamondback's pending acquisition of Brigham Resources in the Delaware Basin represents an important milestone for our company and creates a standard for growth within cash flow in the independent North American E&P space. Diamondback feels we are creating exceptional shareholder value by doubling our Tier One inventory at an attractive entry price. This acquisition is expected to be immediately accretive on operational and financial metrics, and the existing production allows Diamondback to grow volumes on a pro forma basis without compromising balance sheet integrity. We feel that the single well economics of over 100% internal rates of return at today's commodity prices on this acreage compete for capital in the top quartile of our existing inventory and are comparable to the acreage we acquired in July 2016 in the Southern Delaware Basin."

"With Diamondback's proven ability to execute, we now believe we have the resource and acreage base to efficiently support 15 to 20 operated rigs. In addition to our soon to be added sixth rig that will begin developing our previously acquired acreage in the Delaware Basin, we plan to add two additional rigs to develop this pending acquisition in 2017," stated Travis Stice, Chief Executive Officer of Diamondback.

Mr. Stice continued, "We believe our near-term acceleration across our asset base, along with the production from this acquisition, will put us in a position to achieve over 60% production growth in 2017 at the midpoint of our current guidance range. We also believe our balanced acreage position between the Midland and Delaware Basins provides a runway for unprecedented growth for years to come while we remain focused on shareholder returns and balance sheet integrity. We look forward to working with the Brigham team immediately to prepare for a smooth transition post close."

Gene Shepherd, Chief Executive Officer of Brigham Resources stated, "This transaction represents a unique opportunity to place our Southern Delaware Basin assets in the hands of one of the premier value creators and operators in the Permian Basin. I am proud of what the Brigham team accomplished over a few short years in identifying, capturing and developing a large and highly economic inventory of drilling locations across the multiple Wolfcamp and Bone Spring objectives. Along with our sponsors, Warburg Pincus, Yorktown and Pine Brook, we are excited to partner with Travis Stice and the Diamondback team for the asset's next phase of accelerated development."

[dan_s]

Pro forma for the pending acquisition, Diamondback is increasing its preliminary full year 2017 production guidance to a range of 64.0 to 73.0 Mboe/d, up 25% from the midpoint of the prior range of 52.0 to 58.0 Mboe/d.

[dan_s]

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