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Diamondback to expand in Permian with $2.43 billion acreage buy
December 14, 2016 / 9:32 PM / 9 months ago

Diamondback to expand in Permian with $2.43 billion acreage buy

(Reuters) - Oil and gas producer Diamondback Energy Inc (FANG.O) said on Wednesday it would pay $2.43 billion to buy acreage in Texas’ Permian Basin, adding to a string of deals in the prolific shale field.

Diamondback said it would pay privately held Brigham Resources Operating LLC and Brigham Resources Midstream LLC $1.62 billion in cash and 7.69 million of its shares to acquire all of their leasehold interests and related assets.

There has been a slew of land acquisitions in the Permian basin as producers scramble to gain or expand positions in the top U.S. oil field, where drilling costs are low, in preparation for recovering oil prices.

The deal will give Diamondback interests on 76,319 net acres in Pecos and Reeves counties in Texas, bringing the company’s total leasehold interests in the Permian Basin to about 182,000 net acres.

The company raised its 2017 production forecast to 64,000 to 73,000 barrels of oil equivalent per day (boe/d), substantially higher its prior range of 52,000 to 58,000 boe/d.

The company also plans to add two additional rigs to drill the new acreage, which had a net production of about 9,500 boe/d in November 2016.

Diamondback raised its 2017 capital expenditure forecast to $700-$900 million, from its previously-announced range of $500-$650 million in November.

Shares of the company were down 2.5 percent in trading after the bell on the Nasdaq.

Reporting by Swetha Gopinath and John Benny in Bengaluru; Editing by Shounak Dasgupta

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