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Diamondback finalizes $1.55 billion acquisition of Lario, enhancing Midland Basin portfolio

Diamondback Energy, an independent oil and gas company, has successfully completed the acquisition of Lario Permian, marking the closure of two major deals in the fourth quarter of 2022. The company purchased two private operators in the Midland Basin for approximately $3.3 billion.

The acquisition of Lario Permian is expected to greatly enhance Diamondback's position in the Permian Basin, providing access to valuable acreage and resources. This move comes as the company looks to expand its presence in the region and capitalize on the growing demand for oil and gas.

The purchase of the private Midland Basin operators is also a significant step for Diamondback, as it allows the company to diversify its holdings in the region further. With the added resources and expertise, the company is well-positioned to capitalize on the potential opportunities in the Permian Basin.

These deals reflect Diamondback's commitment to expanding its footprint in the energy sector and capitalizing on the growing demand for oil and gas. Investors and industry experts will closely watch the company's continued growth and success in the industry.

What is this deal about

Diamondback Energy Inc. has recently completed its $1.55 billion acquisition of Lario Permian LLC, ending the company's shopping spree in the Midland Basin during the fourth quarter of 2022. This acquisition, along with the acquisition of FireBird Energy LLC in November, is set to boost Diamondback's Midland Basin footprint by roughly 83,000 net acres. It is also expected to create 500 high-quality drilling opportunities and increase the company's oil production by about 37,000 barrels per day (50,000 barrels of oil equivalent per day) in 2023.

In November, Diamondback announced its intention to acquire Lario Permian from Lario Oil & Gas. The acquisition was financed using a combination of cash and stock. Diamondback agreed to acquire all of Lario Permian's leasehold interest and associated assets in exchange for $850 million in cash and 4.18 million shares of Diamondback common stock.

According to the company, the initial proposal for the agreement involved the addition of approximately 25,000 gross (15,000 net) acres and access to more than 150 gross locations situated in the central region of the northern Midland Basin. Diamondback indicated that it anticipated achieving an estimated average production of 18,000 barrels of oil per day (25,000 barrels of oil equivalent per day) for the full year of 2023.

After closing its acquisition of FireBird in November, Diamondback went on to acquire Lario Permian. The private operator was initially valued at approximately $1.6 billion, and Diamondback used a combination of cash and stock to complete the purchase. However, the final cost of the transaction rose to $1.75 billion.

These acquisitions highlight Diamondback's dedication to expanding its operations and boosting production in the Midland Basin. With the rising demand for oil and natural gas in the United States, the company is well-positioned to capitalize on this trend.

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Viper Energy's deal, comprised of cash and equity, secures an additional 2,800 net royalty acres in the Midland Basin and 1,800 in the Delaware Basin. Viper Energy Partners LP, a Diamondback Energy Inc. subsidiary, has inked a deal to acquire mineral and royalty interests in the Permian Basin. The deal, valued at around $1 billion, is with Warwick Capital Partners and GRP Energy Capital. Viper was established by Diamondback with the purpose of owning, purchasing, and capitalizing on oil and natural gas assets in North America, specifically targeting mineral and royalty interests.

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