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Non-core Permian assets to be sold for $160 million by Diamondback Energy in a massive Drop-Down Transaction10/28/21
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.
According to the company’s press release on December 19, Northern Oil and Gas Inc. (NOG) closed its announced deal with a private seller of non-operated interests in the Northern Delaware Basin for $131.6 million in cash. The acquisition was announced with a $13 million deposit in October and is the third Permian Basin acquisition since August, adding to NOG’s $400 million of Permian Basin acquisitions in 2022. The assets of 2,100 net acres are primarily operated by a private company Mewbourne Oil Co., with production anticipated to total almost 2,500 boe/d in 2023. Also, Coterra Energy Inc. and Permian Resource Corp. are operators of the assets. The assets contain high-quality, low breakeven development that is leveraged to some of NOG’s top operating partners, as our investors have come to expect.
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.
In order to sell its part of the sprawling Eagle Ford Shale acreage, Chesapeake Energy Corp. on January 18 concluded an agreement to trade its Brazos Valley region assets to WildFire Energy I LLC for $1.425 billion.
On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.
On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.