Diamondback Energy, a leading oil and gas company in the Permian Basin, is making a big move to strengthen its operations.
The company announced a $4 billion cash-and-stock deal to acquire 40,000 acres of oil-rich land from Fort Worth-based Double Eagle IV Midco. The acquisition will expand Diamondback’s drilling opportunities and is expected to increase cash flow starting in 2026.
This deal gives Diamondback access to 407 new drilling locations in the Midland Basin, one of the richest reserves in the U.S. Around 68% of this land is undeveloped, meaning Diamondback will have plenty of room to grow its production over time, according to the Midland-based company.
The transaction is expected to close in April.
“Double Eagle is the most attractive asset remaining” in the Permian’s Midland sub-region, said Travis Stice, chairman and chief executive officer of Diamondback, said in the statement. “This largely undeveloped asset adds high-quality inventory that immediately competes for capital.”
The newly acquired assets will produce an average of 27,000 barrels of oil per day this year, according to Diamondback.
Double Eagle is led by Texas Tech graduates Cody Campbell, who played football for Mike Leach, and John Sellers, whose team has begun and sold several shale businesses in recent years.
“We are excited to announce a deal on Double Eagle IV with Diamondback,” Campbell said on X. “Very proud of our team and the great asset we’ve built —perfect addition to FANG’s [Diamondback’s] already stellar inventory."
In 2022, Double Eagle and EnCap Investments formed a partnership to create Double Eagle Energy Holdings IV and Tumbleweed Royalty IV. Tumbleweed's primary focus was on royalty and mineral interests in the Permian. The new entities also received minority investments from Apollo Natural Resource funds, Magnetar Capital, and other strategic institutional partners.
“It was very important to John and me that we transact with not only the best operator in the Basin, but also a group that share our core values, is based in Midland, and understands the significance of its impact on the West Texas Community," Campbell said.
Diamondback, an independent producer based in Midland, is the second largest producer in the Midland Basin behind Exxon Mobil. Double Eagle is believed to be one of the last remaining big private equity positions in the Permian. It also ranks near the top for private ownership of Midland Basin inventory.
In the 12 months ending November 2024, Double Eagle IV produced about 31,500 barrels of oil equivalent, according to Texas Railroad Commission data. Company-operated production averaged approximately 121,000 barrels of oil equivalent per day in November 2024, a 177% increase from roughly 43,500 barrels the year before.
TPH&Co, the energy business of Perella Weinberg Partners, is serving as financial adviser to Diamondback. Kirkland & Ellis LLP is acting as legal adviser to Diamondback. RBC Capital Markets, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC are acting as financial advisers to Double Eagle. Vinson & Elkins LLP is acting as legal adviser to Double Eagle.
“We congratulate John, Cody, and the entire Double Eagle team on another exceptional outcome and look forward to continuing our partnership," said Kyle Kafka, partner of EnCap. "This high-quality asset base is a natural fit with Diamondback, the leading public operator in the Midland Basin, and we are excited to be a significant shareholder going forward.”