HOUSTON — Diamondback Energy, Inc. has paid $174 million for a stake in 6,450 acres in the Permian Basin that it believes could be a contender for horizontal drilling, the company announced Tuesday.
The deal gives Diamondback a 43.8-percent working interest in the acreage, located in Martin County, north of Midland, Texas. Based on that ownership stake, the acreage was producing a net of 1,600 barrels of oil equivalent per day from a net of 63 vertical wells as of November.
But Diamond, which is based in Midland, believes the acreage could hold potential for vastly more horizontally drilled wells.
“I am extremely excited about this pending acquisition in Martin County as it offers an opportunity for Diamondback stockholders to expand their exposure to what we believe to be the core area of one of the most prolific basins in North America,” Diamondback CEO Travis Stice said in a written statement. “We believe these assets are as good as or better than our existing acreage position.”
The company estimates the deal includes about 4.2 million barrels per oil equivalent in net proved reserves.
Diamondback did not disclose the seller or the current operator in its announcement. Company representatives did not immediately responded to calls and e-mails seeking clarification.
Diamondback has made offers to the remaining owners of the working interest, which could bring the deal’s value up to $397 million. Diamondback would become operator if two or more entities holding more than half the working interest appoint it as such.
The deal is expected to close by the end of the month, the company said in its announcement.
Also on FuelFix: