Diamondback Energy (FANG) Acquisition

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On August 8, 2018 Diamondback announced it has entered into a definitive purchase agreement to acquire all leasehold interests and related assets of Ajax Resources, LLC (“the Seller” or “Ajax”) for $900 million in cash and 2.58 million shares of Diamondback common stock, subject to certain adjustments. The cash portion of this transaction is expected to be funded through a combination of cash on hand, cash proceeds from the previously announced drop down sale ("drop down") of mineral interests to Viper Energy Partners LP ("Viper"), borrowings under the Company's revolving credit facility and/or proceeds from one or more capital markets transactions, which may include a debt offering.

AJAX ACQUISITION
•25,493 net leasehold acres in the Northern Midland Basin, including ~21,000 net acres in Northwest Martin and Northeast Andrews counties; ~89% held by production (“HBP”)
•Producing over net 12,100 boe/d (88% oil) as of August 6, 2018 < Immediately accretive.
•362 net identified potential horizontal drilling locations with an average lateral length of over 9,500 feet; ~220 net potential locations in the top quartile of Diamondback’s current inventory
•~99% of acreage operated, with average 99% working interest and 23% average royalty burden
•Acreage HBP allows for 12+ well multi-zone pad development in the Middle Spraberry, Lower Spraberry and Wolfcamp A
•Ajax midstream infrastructure includes 40 Mb/d in saltwater gathering and disposal, 45 Mb/d of existing fresh water production and ownership of over 700 surface acres
•Accretive on NAV, acreage, top quartile inventory and 2019 financial metrics
•Company will issue 2.58 million shares of Diamondback common stock to the Seller valued at $345 million based on the August 6, 2018 closing price of $133.62 < Not very dilutive.
•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, cash received from the recently signed mineral drop down to Viper, existing borrowing capacity and/or proceeds from one or more capital markets transactions, which may include a debt offering
•An effective date of July 1, 2018 with anticipated close at the end of October 2018, subject to continued diligence and closing conditions < Will add 8,000 Boepf to Q4 production forecast.
•Upon completion, the pending Ajax acquisition will bring Diamondback’s total leasehold interests to approximately 230,000 net surface acres in the Permian Basin

Mr. Stice continued, "Diamondback’s announced acquisition of high quality assets from Ajax Resources provides additional Tier 1 resource directly adjacent to our existing acreage in Northwest Martin and Northeast Andrews counties. With approximately 220 net locations capable of generating 100% or greater IRRs at $60/Bbl across three zones, this transaction is accretive to our top quartile inventory, NAV and 2019 financial metrics. We expect the transaction to close at the end of October 2018, with interim Ajax development focused on large multi-well, multi-zone pad development to be assumed by Diamondback in November. Credit is due to the Ajax team for displaying impressive results in two emerging zones for the area, the Wolfcamp A and Middle Spraberry. These results highlight the value of this acreage in our existing portfolio, and more than doubles Diamondback's inventory to 680 net pro forma locations in this area."

Rich Little, Chief Executive Officer of Ajax Resources stated, “This transaction represents a logical transition for the Ajax asset base, as it complements Diamondback’s acreage position very well and further consolidates the Northern Midland Basin. I am extremely proud of what the Ajax team accomplished over the past three years. With the strong sponsorship and support of our private equity partner, Kelso, we were able to deploy the necessary resources and capital to delineate and strategically develop an underexploited asset base.”