Diamondback Energy Inc., Midland, Tex., has agreed to acquire all leasehold interest and related assets of Lario Permian LLC, a wholly owned subsidiary of Lario Oil & Gas Co., and certain associated sellers for a cash and stock exchange valued around $1.5 billion ($850 million cash, 4.18 million common shares).
The deal is a bolt-on to the company’s existing Martin County, Texas position, adding some 25,000 gross (15,000 net) acres (93% operated, average 86% working interest; 92% currently held by production) in the Northern Midland basin with estimated full year 2023 average production of about 18,000 b/d of oil (25,000 boe/d). Actual production based on 11 months of production is expected to be about 16,500 b/d of oil (23,000 boe/d).
Post close, for 2023 development, Diamondback expects to reduce the operated rig count on the assets to “one or less” from the current two.
The acquired acreage includes 154 estimated gross (132 net) horizontal locations with an average lateral length of over 9,400 ft and includes 20 drilled-but-uncompleted wells. Primary targets are Middle Spraberry, Jo Mill, Lower Spraberry, Wolfcamp A, and Wolfcamp B formations. Diamondback envisions 28 gross upside locations in Wolfcamp D based on recent well results.
The deal is the second in Permian's Midland basin for Diamondback in just over a month. Mid-October, the company noted a deal to acquire all leasehold interest and related assets of FireBird Energy LLC, Fort Worth, Tex., in another cash and stock deal valued over $1 billion to build scale in the basin (OGJ Online, Oct. 11, 2022).
The deal with Lario Permian is expected to close on Jan. 31, 2023, subject to customary closing conditions and adjustments.