Page 6 - NorthAmOil Week 41 2022

NorthAmOil INVESTMENT NorthAmOil

Diamondback to acquire FireBird for $1.6bn

PERMIAN BASIN DIAMONDBACK Energy has announced a duration of the company’s cash return profile.”
major acquisition in the Permian Basin’s Mid- Diamondback also announced a target to sell
land sub-basin, having agreed to purchase Fire- at least $500mn of non-core assets by the end
Bird Energy for $1.6bn in cash and stock. of 2023, with proceeds earmarked for further
The purchase is of all leasehold interest and debt reduction. The cash portion of the FireBird
related assets for 5.86mn shares of Diamondback transaction will be funded through a combi-
common stock and $775mn in cash. nation of cash on hand, borrowings under the
FireBird’s assets currently consist of approx- company’s credit facility and/or proceeds from a
imately 72,000 “highly” contiguous gross acres senior notes offering. The cash outlay at closing is
(291 square km) in the Midland Basin, Texas expected to be approximately $700mn.
with an estimated production of some 17mn The transaction is valued at around three
barrels per day (bpd) of oil. times 2023 EBITDA – a measure of profitability
The 2023 estimated average production is – with a 15% free cash flow yield at strip pricing,
around 19mn bpd of oil. said Diamondback.
The transaction is expected to close late in the It is immediately accretive to all relevant 2023
fourth quarter of 2022. and 2024 financial metrics, including cash flow
“With over 350 locations adjacent to our per share, free cash flow per share and net asset
current Midland Basin position, this asset adds value per share, said the company.
more than a decade of inventory at our antic- The acquisition increases the expected pro
ipated development pace, including inventory forma 2023 per share cash returned to stockhold-
that competes for capital right away in Dia- ers by approximately 3%, it added, and extends
mondback’s current development plan,” Dia- pro forma inventory life in primary development
mondback’s chairman and CEO, Travis Stice, zones and is leverage-neutral.
said. “Also, importantly, this transaction is The purchase is the largest deal for Diamond-
accretive on all relevant 2023 and 2024 finan- back since its purchases of QEP Resources and
cial metrics, immediately increasing expected Guidon Operating in 2020 for a total of $3.2bn
per share returns to our stockholders in the including debt. At that time oil prices were low,
near term while also improving the long-term spurring a wave of consolidation.™

ExxonMobil reportedly considering

purchase of EOR specialist Denbury

US EXXONMOBIL is considering purchasing the was oil, according to its website.
oil recovery specialist Denbury, Bloomberg The company’s core operations are in two
News has reported, citing anonymous knowl- geographic areas, the Gulf Coast and Rocky
edgeable sources. The talks are at an early stage, Mountain regions.
said Bloomberg. Denbury’s appeal to buyers is seen as its focus
The Texas-based super-major has declined to on enhanced oil recovery (EOR) with industri-
comment on the matter, as has Denbury. ally sourced carbon dioxide (CO2) and its focus
Shares of Denbury were at almost $92 in mid- on the emerging industry of carbon capture, uti-
day trading on October 14, up by nearly 5.8% lisation and storage (CCUS). Denbury has CO2
over the last month. They had jumped almost pipeline infrastructure of around 1,300 miles
12% to just over $99 when the news broke on (2,092 km).
October 10. Using industrially sourced CO2 in EOR
In fact, shares of Denbury have increased significantly reduces the carbon footprint of
more than 60% since late July because of high oil the oil that Denbury produces, says the com-
prices and speculation about an acquisition, said pany, underpinning the company’s goal to
the Motley Fool. fully offset its emissions including in its value
Denbury currently has a market value of chain.
around $5bn. Exxon Mobil has predicted a $4 trillion global
Reuters has previously reported that Den- CCUS market by 2050.
bury was considering a sale, and that Chevron Its oil production would likely be of less inter-
might be a potential buyer. est for ExxonMobil, say analysts. Denbury has a
Denbury had 191.7mn barrels of oil equiva- projected daily output of 46,000-49,000 boe per
lent (boe) of estimated proved oil and natural gas day, while Exxon Mobil produced 3.7mn boepd
reserves as of December 31, 2021, of which 97% in the second quarter of 2022.™

P6 www. NEWSBASE .com Week 41 13•October•2022