Diamondback Energy To Buy Addl. Acreage In Midland Basin For Nearly $174 Mln

(RTTNews) - Diamondback Energy, Inc. (FANG) has inked definitive purchase deals with unrelated third party sellers to purchase additional leasehold interests in Martin County, Texas, in the Permian Basin, for an aggregate purchase price of about $174 million.

This includes 6,450 gross (2,825 net) acres with a 43.8% working interest and net production of approximately 1,600 BOE/d in November 2013 from 145 gross (63 net) producing vertical wells. Net proved reserves, based on the firm's internal estimates as of December 31, 2013, totaled around 4,185 MBOE. Diamondback believes that the acreage is prospective for horizontal drilling in the Wolfcamp B, Lower Spraberry, Middle Spraberry, Wolfcamp A, Cline and Clearfork horizons, and has identified 42 potential horizontal drilling locations in each of the Wolfcamp B and Lower Spraberry horizons based on 160 acre spacing per well and an aggregate of 112 potential horizontal drilling locations in the Middle Spraberry, Wolfcamp A, Cline and Clearfork intervals based on 120 acre spacing per well.

As part of the existing joint operating agreement, the company has made offers to the owners of the final 56.2% of the working stakes to buy their interests in the acreage. If all such owners were to sell their interests to us, the aggregate purchase would be about $397 million.

Diamondback would become the operator of this acreage if and when two or more working interest holders totaling over 50% of the working interest appoint the company as the successor operator. The acquisition is slated to close by February 2014 end.