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Diamondback finalizes $1.55 billion acquisition of Lario, enhancing Midland Basin portfolio
03/17/2023![Diamondback-finalizes-1-55-billion-acquisition-of-Lario-enhancing-Midland-Basin-portfolio](https://images2.rextag.com/public/blog/135Blog_Diamondback_Acquires_Lario_Permian.png)
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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Civitas Resources Advances with Midland Assets in a $2.1 Billion Agreement
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Denver-rooted Civitas Resources, Inc. concluded an arrangement to acquire Vencer Energy's assets in the Midland Basin from Vitol for an approximate $2.1 billion. The $2.1 billion arrangement between Civitas Resources and Vencer Energy is a strategic maneuver that enlarges Civitas' presence in the resource-rich Permian Basin. By securing approximately 44,000 net acres, Civitas not only acquires a substantial asset but also amplifies its production capacity by 62 to 62.5 Mboe/d. The transaction, which is anticipated to complete in January, is perceived as a cost-effective acquisition that markedly enhances Civitas Resources’ scale in the Permian Basin.
Anticipated Growth: Endeavor Energy's Value Nearing $30 Billion
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This summer, J.P. Morgan Securities highlighted Endeavor Energy Resources as the Midland Basin's standout in mergers and acquisitions, suggesting its value might approach $30 billion. Endeavor Energy Resources, a privately-owned entity in Midland focusing solely on its operations, has seen a significant uptick in production. It now boasts a production rate of 331,000 barrels of oil equivalent per day (boe/d), marking a 25% increase from the previous year.
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The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/282_Blog_Renewable Natural Gas How RNG Changes the Industry.jpg)
The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/295_Blog_Renewable Efforts Lag as Global Oil and Gas Demand Continues to Rise.jpg)
Recently, the progress toward an energy transition is hitting a snag. Sales of electric vehicles are decelerating, and the growth in wind and solar power needs to be keeping pace with expectations. To make matters more challenging, electricity prices are climbing when they were expected to fall. Amidst these setbacks, the oil and gas sectors are proving resilient. According to BP's latest energy outlook, not only are these energy mainstays here to stay, but their demand is expected to remain relatively high even after reaching a peak. Interestingly, BP forecasts that oil demand will reach its zenith next year, marking a critical moment in energy consumption trends. This isn't the first time BP has projected a peak in oil demand. Back in 2019, their review anticipated a decline in demand growth, but the prediction fell flat. Instead, oil demand surged to unprecedented levels following the end of the global pandemic lockdowns, defying previous forecasts and underscoring the enduring dominance of traditional energy sources in the global market.