Page 9 - NorthAmOil Week 37 2021

NorthAmOil INVESTMENT NorthAmOil

Investment firm Warwick buying

Eagle Ford assets for $450mn

TEXAS WARWICK Investment Group announced this The company is also aiming to take advantage
week that it had agreed to buy operated oil and of the recovery in oil prices and demand through
gas assets in the Eagle Ford shale play from pri- current production at the asset, as well as its near-
vately owned Rosewood Resources for around term development.
$450mn. The deal follows the March closing of War-
Part of the financial commitment includes wick’s fourth energy fund, which raised $416mn.
future development, which Warwick said would Few details about the acreage were provided.
target gas and natural gas liquids (NGLs). The Rosewood is a subsidiary of the Rosewood
investment firm owns stakes in more than 5,000 Corp., which in turn is wholly owned by the
wells and already has property immediately adja- billionaire Hunt family’s Caroline Hunt Trust
cent to the Rosewood acreage. Estate. According to Rosewood’s website, the
“This asset sits well within Warwick’s invest- company has operations across several different
ment criteria targeting current production, parts of the US. The company’s interests in the
future drilling inventory and diversified com- Eagle Ford are non-operated, the website says.
modity streams,” stated Warwick’s co-chief Privately owned companies have been seen to
investment officer, Ian Rainbolt. “We believe be drilling more in shale plays than their public
this acquisition represents a strong risk-adjusted counterparts this year, potentially with hopes
return on deployed capital for our investors and of being bought out as the wave of mergers and
welcome this asset to the Warwick portfolio,” he acquisitions (M&As) continues. Indeed, accord-
said. ing to a recent note from Morningstar, the pub-
“Rosewood grows Warwick’s exposure licly operated rig count has risen about around
to world-class, geologically diversified and 50% from pandemic-related lows last year, while
de-risked reservoirs,” added Warwick’s CEO, the privately operated rig count has risen by
Kate Richard. roughly 80%.™

Diamondback accelerates

stock buyback programme

US SHALE driller Diamondback Energy announced in excess of our cost of capital at mid-cycle com-
this week that it had accelerated plans to return modity prices, which is the case today.”
50% of its free cash flow to shareholders, bring- The company’s remaining free cash flow, as
ing them forward to the fourth quarter of this well as asset sale proceeds, will be earmarked for
year. The company’s board of directors has also further debt reduction according to Stice. Dia-
approved up to $2bn in share buybacks that will mondback expects the sale of its North Dakota
be aimed at complementing this commitment, assets to close in the next few weeks, with the net
also beginning in the fourth quarter. proceeds, along with cash on hand, set to be used
Diamondback expects The drive to return 50% of free cash flow to to pay off the remaining $650mn in outstanding
the sale of its North shareholders was initially set to begin in 2022 callable debt in the company’s capital structure.
Dakota assets to close before being brought forward. Those assets, which Diamondback acquired
in the next few weeks. “Diamondback is accelerating its previously through its takeover of QEP Resources earlier
announced capital return programme due to this year, are being sold to Oasis Petroleum for
continued strong operational performance and around $745mn.
improved capital efficiency, a supportive macro At the time the deal was announced, in early
backdrop and increasing financial strength,” May, Stice described the company’s strategy of
stated Diamondback’s CEO, Travis Stice. “While “exploit and return”, which consists of spend-
our consistent and growing base dividend ing maintenance capital to hold oil production
remains our primary means of returning capital, flat while using free cash flow to reduce debt
we plan to opportunistically repurchase shares and return cash to stockholders. The latest
of our common stock, with the remaining free announcement, as well as Diamondback’s sec-
cash flow allocated to our stockholders, when we ond-quarter results release last month, also reit-
expect the return on that repurchase to be well erated these plans.™

Week 37 16•September•2021 www. NEWSBASE .com P9