Diamondback Energy, a Texan oil and gas company, has agreed to acquire rival Ajax Resources in a cash-cum-stock deal worth around $1.24bn.
As part of the deal, Diamondback Energy will acquire all leasehold interests and related assets of Ajax Resources for $900m in cash along with issuance of 2.58 million of its shares to the latter.
The acquisition will see Diamondback Energy add 25,493 net leasehold acres in the Northern Midland Basin, which includes nearly 21,000 acres in Northwest Martin and Northeast Andrews counties, out of which around 89% are held by production (HBP).
The assets involved in the transaction had produced more than 12,100boe/d as of 6 August 2018, with 88% of it being oil.
Ajax Resources’ acreage features 362 identified potential horizontal drilling locations having an average lateral length of more than 9,500ft. Nearly 220 of the net potential locations are in the top quartile of the current inventory of Diamondback Energy.
Diamondback Energy CEO Travis Stice said: “Diamondback’s announced acquisition of high quality assets from Ajax Resources provides additional Tier 1 resource directly adjacent to our existing acreage in Northwest Martin and Northeast Andrews counties.
“With approximately 220 net locations capable of generating 100% or greater IRRs at $60/Bbl across three zones, this transaction is accretive to our top quartile inventory, NAV and 2019 financial metrics.”
After completion of the acquisition, the Texan oil and gas company will expand its total leasehold interests to around 230,000 net surface acres in the Permian Basin.
Ajax Resources CEO Rich Little said: “This transaction represents a logical transition for the Ajax asset base, as it complements Diamondback’s acreage position very well and further consolidates the Northern Midland Basin.
“I am extremely proud of what the Ajax team accomplished over the past three years. With the strong sponsorship and support of our private equity partner, Kelso, we were able to deploy the necessary resources and capital to delineate and strategically develop an underexploited asset base.”
The transaction is anticipated to be completed at the end of October 2018.