Diamondback Energy will buy Energen in all-stock transaction valued at around US$9.2 billion, which will create the third-largest pure play Permian company in terms of production, Diamondback said in a statement on Tuesday.
The value of the deal, unanimously approved by the Board of Directors of each company, includes Energen's net debt of US$830 million as of June 30, 2018.
Earlier this year, Energen was a potential takeover target of activist investor Carl Icahn and hedge fund manager Keith Meister's Corvex Management.
Under pressure from Corvex, Energen appointed in March two independent directors to its expanded board of directors, and promised to "promptly conduct an in-depth review, assisted by its financial advisers, of the company's business plan, competitive positioning, and potential strategic alternatives" as part of efforts to enhance shareholder value.
Diamondback Energy's deal with Energen comes just a week after Diamondback announced it had entered into a definitive agreement to buy all leasehold interests and related assets of Ajax Resources in the northern Midland Basin for US$900 million in cash and 2.58 million shares of Diamondback common stock.
The two announced acquisitions take Diamondback's combined pro forma Q2 2018 production to over 222,000 boe/d, of which 67 percent was oil-the third-largest production for a pure play company in the Permian Basin, the company said. This is an increase of 79 percent from Diamondback's Q2 2018 production of 124,700 boe/d.
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"This transaction represents a transformational moment for both Diamondback and Energen shareholders as they are set to benefit from owning the premier large cap Permian independent with industry leading production growth, operating efficiency, margins and capital productivity supporting an increasing capital return program," Diamondback CEO Travis Stice said.
The transaction is the latest in this year's consolidation push in the U.S. shale patch, after Concho Resources struck a deal to acquire natural gas peer RSP Permian for US$9.5 billion in an all-stock transaction that is the biggest acquisition in the sector since 2012.
By Tsvetana Paraskova for Oilprice.com
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