Global alternative asset manager Carlyle Group and Diamondback Energy have signed an agreement to oil and gas assets in the prolific Permian basin of Texas, US.
As part of the joint venture, Carlyle’ Carlyle Energy Mezzanine Opportunities Fund II will provide up to 85% in funding for the development program of the oil and gas assets in the Permian basin over five years.
The firms will jointly invest $620m to develop the assets in the San Pedro area of Pecos county, Texas within the Southern Delaware basin.
The Carlyle Energy Mezzanine Opportunities managing director Vince Hahn said: “We are incredibly excited to start this partnership with Diamondback, which has demonstrated year-after-year excellence in developing the Permian basin.”
However, Carlyle’s working interests will largely revert to Diamondback upon meeting certain performance milestones in the program.
Diamondback CEO Travis Stice said: “This joint venture will allow Diamondback to bring forward present value on the southeastern portion of our Pecos County acreage, with added benefit to our minerals and midstream businesses. We look forward to our partnership with a group as well respected as The Carlyle Group.”
Diamondback’s activities in the Permian basin are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork, Bone Spring and Cline formations.
Last month, Diamondback Energy has agreed to acquire Energen and Ajax Resource in deals worth $9.2bn and $1.24bn respectively.
Diamondback CEO Travis Stice said: “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 expects the combined deals to increase its acreage in the Permian’s Midland and Delaware basins by about 85%, up from 211,000 net acres to 390,000 net acres.
Additionally, the two deals are expected to bring the third largest production capacity for a pure play company in the Permian Basin, the firm noted.