Oil and gas company Diamondback Energy said on Tuesday it would buy certain units of EnCap-backed energy producer Double Eagle in a cash-and-stock deal for about $4.08 billion.
The deal would give Diamondback access to about 40,000 net acres in the core of Midland Basin, one of the last large assets in the Permian Basin – the most extensive oil field in the United States.
Diamondback added that it would sell at least $1.5 billion of non-core assets to reduce pro-forma debt. The shale producer expects to lower net debt to $10 billion and, long term, maintain leverage of $6 billion to $8 billion.
Last year, Reuters had reported that Texas-based Double Eagle was exploring a sale of its Permian Basin-based producer in a deal that could be worth more than $6.5 billion, including debt.
“Double Eagle is the most attractive asset remaining in the Midland Basin. With 407 locations adjacent to our core position, this largely undeveloped asset adds high-quality inventory,” Diamondback CEO Travis Stice said in a statement.
Diamondback said it would pay roughly 6.9 million shares and $3 billion in cash, which it expects to fund through a combination of cash on hand and borrowings.
The transaction is expected to close on April 1.
(Reporting by Pooja Menon and Vallari Srivastava in Bengaluru; Editing by Maju Samuel)