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Non-core Permian assets to be sold for $160 million by Diamondback Energy in a massive Drop-Down Transaction

Diamondback Energy Inc. intends to reduce its debt through the divestment as it pivots to its core Permian Basin acreage and maintains steady oil volumes through 2021, just like many other leading players in the industry.

In line with this, Diamondback sold some of its water assets to its midstream affiliate, Rattler Midstream LP, in a recent drop-down deal, taking advantage of a strong A&D (acquisition and divestitures) market. Most of the divested assets the company had acquired through its acquisitions of QEP Resources and Guidon Operating earlier in the year.

Besides this motion, the company had already sold its Williston Basin assets for more than $800 million back in May 2021.

And now Diamondback was able to win $160 million more out of Rattler, seeing as the affiliate had already agreed to acquire its produced water gathering and disposal infrastructure, produced water recycling facilities, and source water gathering and storage.

Rattler and Diamondback also agreed to add certain Diamondback leasehold acreage to Rattler's commitment of produced water collection and disposal services as part of the amendment announced on October 21.

According to the arrangement of the drop-down deal, Rattler will make use of its cash on hand and borrowings under its revolving credit facility to fund the transaction, which is expected to close during the fourth quarter.

As for Rattler Midstream itself, Diamondback Energy formed it as a growth-oriented Delaware limited partnership in July 2018 in order to own, operate, develop and acquire midstream infrastructure assets in the Midland and Delaware basins of the Permian Basin.

And through its joint venture with a private affiliate of an investment fund, it recently acquired a majority stake in a gas gathering and processing company in the Midland Basin from West Texas Gas Inc.

As for the transaction at hand, Raymond James & Associates Inc. and Hunton Andrews Kurth LLP are providing financial and legal advice to the conflicts committee of Rattler's board of directors.

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Ain't Nothing Like a $2 Billion Deal: Oasis Sells Midstream Affiliate to Crestwood

Crestwood & Oasis Midstream merge to create a top Williston #basin player. $1.8 billion deal is expected to close during the Q1 of 2022. The transaction will result in a 21.7% ownership stake for Oasis in Crestwood common units. The remaining ownership of Oasis in Crestwood will also be of benefit to the company since it will create a diversified midstream operator with a strong balance sheet and a bullish outlook after this accretive merger.

As you know the US Oil Rig Count has dropped by over 20% from January to December 2019. In Texas we saw oil rigs count dropping over 30% in that same time frame.

Oil output in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. Additionally, gas productivity in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Given that this growth has been expected, recent global market changes make forecasting the output even more challenging. Learning how production will change is easier with early activity tracking, a new service recently launched by Rextag – Pad Activity Monitor. With the help of PAM, you are able to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days. Additionally, it cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. In order to access reports, charts, tables, and mapping visualizations via Rextag’s Energy DataLink use a web-based application allowing users to filter, download and identify activity on a map or data table. Moreover, customers will be able to set up daily, weekly, and monthly email report notifications.

The EIA forecasts that total output in the main U.S. shale oil basins will increase 142,000 bbl/d to 8.761 million bbl/d in June, the most since March 2020. Oil productivity in the Permian Basin in Texas and New Mexico is supposed to go up 88,000 bbl/d to a record 5.219 million bbl/d in June, as the U.S. Energy Information Administration (EIA) announced in its report on May 16. In the largest shale gas basin, the productivity in Appalachia in Pennsylvania, Ohio and West Virginia will grow up to 35.7 Bcf/d in June, its highest since beating a record 36 Bcf/d in December 2021. Gas output in the Permian Basin and the Haynesville in Texas, Louisiana and Arkansas will rise to record highs of 20 Bcf/d and 15.1 Bcf/d in June, respectively. Speaking of the Permian future output, putting hands on upcoming changes in production has recently been made easier with the new Rextag's service - Pad Activity Monitor. Thanks to satellite imagery and artificial intelligence, customers are able to monitor the oil and gas wells and are provided with near real-time activity reports related to drilling operations. However, it is noticed that productivity in the largest oil and gas basins has decreased every month since setting records of new oil well production per rig of 1,544 bbl/d in December 2020 in the Permian Basin, and new gas well production per rig of 33.3 MMcf/d in March 2021 in Appalachia.

No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America’s largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices. Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. Rextag's Pad Activity monitor (PAM) allows you to see well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence. While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.

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