Diamondback Energy (FANG) Update - April 20

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Diamondback Energy (FANG) Update - April 20

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Former Sweet 16 company (moved to our High Yield Income Portfolio this year) Diamondback Energy is now expected to generate $1billion in cash by selling non-core assets in West Texas.

(Bloomberg) -- Diamondback Energy Inc. is looking to sell non-core assets in the western Permian Basin as the oil producer looks to cash in on an increasingly active deal market in US shale.

The company is working with a financial adviser to seek a buyer for assets around Pecos County, Texas, according to people familiar with the matter, who asked to not be identified because the process is confidential. No final decision has been made and Diamondback could opt to hold onto the assets, the people added.

The move makes strategic sense and would enable the Midland, Texas-based explorer to cut debt quicker, according to KeyBanc Capital Markets.

“Diamondback is actually drilling stronger wells than industry peers in this part of the basin,” Tim Rezvan, a KeyBanc analyst, wrote in a note to investors on Wednesday. “Above-average results naturally increase the attractiveness of this acreage.”

While it’s not clear what the assets would fetch in a sale, Diamondback raised its non-core asset sale target to $1 billion from $500 million in February.
Dan Steffens
Energy Prospectus Group
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