Energen, one of Birmingham’s largest public companies, has been acquired by the Texas energy company Diamondback Energy in a deal reportedly valued at $9.2 billion and which creates the premier large cap Permian independent. The boards of each company voted unanimously to combine the two companies. The Diamondback Energy deal comes on the heels of Energen’s sale of Alagasco two years ago to Spire and shifting its focus on oil exploration and production.
What It Means for Energen
The transaction is expected to be completed by the end of the year upon approval of both Diamondback and Energen shareholders as well as regulatory approvals.
“We are very please about this transaction and believe that the combination of the two companies’ quality assets, track record of execution and peer-leading cost structures will form an even stronger large-cap producer uniquely positioned to drive growth and development,” said Jim McManus, Chairman and CEO of Energen. “We believe this all-stock transaction with Diamondback is the best path forward for our company and provides Energen shareholders with an excellent value for their investment, now and in the future.”
This transaction is the outcome of a comprehensive strategic review by Energen’s board with the assistance of outside advisors which examined the company’s business plan, competitive positioning and strategic alternatives. McManus also stated that Energen’s biggest strength was its employees and publicly thanked them for their dedication and hard work.
Who is Diamondback Energy?
Diamondback is an independent oil and natural gas company headquartered in Midland, Texas that focuses on the acquisition, development, exploration and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas.
Diamondback stated today that the combined company will now own more than 266,000, Tier One acres in the Permian Basin, a sedimentary basin located in west Texas and southeastern New Mexico. Which is a 57 percent increase in Diamondback’s current acreage. There also will be significant midstream assets across both the Midland and Delaware basins as a result of the merger. Energen shareholders will receive 0.6442 shares of Diamondback stock for each share of Energen according to a statement released by Diamondback.
“We look forward to welcoming Energen’s employees as members of the Diamondback team, and applaud them for the hard work and dedication they have put forth to create this opportunity for the two teams to become one,” said Travis Stice, Chief Executive Officer of Diamondback. “The synergies provided in this transaction, as well as the opportunities for capital improvements provided by increased size and scale, create a truly outstanding value proposition. The combined company’s expected production growth, capital productivity and cost structure will enhance our free cash flow profile to grow our long-term capital return program.”
Diamondback’s headquarters will remain in Midland, Texas and there will be no changes made in executive leadership.