Diamondback Energy Prices Offering of Senior Notes

Rhea-AI Summary

Diamondback Energy, Inc. (NASDAQ: FANG) announces pricing of $6.5 billion senior notes offering to fund acquisition and debt repayment.

Insights

Financial Analyst

Diamondback Energy's recent announcement regarding its multi-tranche senior notes offering is a strategic move to restructure its capital and potentially lower its cost of capital. The offering includes various maturities, ranging from short-term to ultra-long-term notes, indicating a ladder strategy for managing debt maturities. The interest rates, which are fixed, suggest a moderate risk assessment from the investors' perspective, given the current interest rate environment and the company's creditworthiness.

The decision to use the net proceeds for general corporate purposes, including the acquisition of Endeavor, shows a clear strategy towards expansion and debt management. Investors should note that the acquisition could lead to synergies and increased market share for Diamondback. However, the added debt load must be balanced against the potential for increased cash flow from the acquisition. The pricing of the notes at slightly below par value also reflects the market's view on the risk-return profile of the offering.

Market Research Analyst

Investing in Diamondback Energy's notes offering requires an understanding of the energy sector's dynamics and the company's position within it. The energy market, particularly in oil and gas, is subject to volatility due to geopolitical tensions, supply-demand shifts and transitions to renewable energy sources. Diamondback's focus on the Permian Basin, a prolific oil-producing area, provides it with a competitive edge in terms of production costs and operational efficiencies.

However, the long-term notes, maturing in 2054 and 2064, carry additional risks related to the sector's long-term outlook, including potential regulatory changes and the shift towards sustainable energy sources. Investors should weigh these factors against the higher yields offered by these longer maturities. The company's ability to manage its expanded asset base post-acquisition will be important in maintaining its credit profile and ensuring the success of this offering.

Debt Capital Markets Expert

The structure of Diamondback Energy's notes offering reflects a comprehensive approach to capital management. By offering a range of maturities, Diamondback is appealing to a broad investor base with varying risk appetites and investment horizons. The staggered maturities also provide flexibility for the company to refinance or retire portions of the debt without facing a significant burden at any single point in time.

Furthermore, the use of a shelf registration statement on Form S-3ASR indicates an efficient use of regulatory mechanisms to expedite the offering process. It's important for stakeholders to monitor the closing conditions and subsequent use of proceeds, as these will impact the company's leverage ratios and interest coverage metrics. The involvement of major financial institutions as joint book-running managers lends credibility to the offering and ensures a wide distribution of the notes.

MIDLAND, Texas, April 09, 2024 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback”) announced today that it has priced an offering (the “Notes Offering”) of $850,000,000 in aggregate principal amount of 5.200% senior notes that will mature on April 18, 2027 (the “2027 Notes”), $850,000,000 in aggregate principal amount of 5.150% senior notes that will mature on January 30, 2030 (the “2030 Notes”), $1,300,000,000 in aggregate principal amount of 5.400% senior notes that will mature on April 18, 2034 (the “2034 Notes”), $1,500,000,000 in aggregate principal amount of 5.750% senior notes that will mature on April 18, 2054 (the “2054 Notes”) and $1,000,000,000 in aggregate principal amount of 5.900% senior notes that will mature on April 18, 2064 (the “2064 Notes” and, together with the 2027 Notes, the 2030 Notes, the 2034 Notes and the 2054 Notes, the “Notes”).

The price to the public is 99.956% of the principal amount for the 2027 Notes, 99.830% of the principal amount for the 2030 Notes, 99.679% of the principal amount for the 2034 Notes, 99.957% of the principal amount for the 2054 Notes and 99.954% of the principal amount for the 2064 Notes.

Diamondback intends to use the net proceeds from the Notes Offering for general corporate purposes, including, without limitation, paying a portion of the cash consideration for the pending acquisition of Endeavor Parent, LLC (“Endeavor”), repaying certain debt of Endeavor and/or its subsidiaries and paying fees and expenses related thereto. The Notes Offering is expected to close on April 18, 2024, subject to customary closing conditions.

The Notes will be sold in a registered offering pursuant to an effective shelf registration statement on Form S-3ASR that was previously filed with the Securities and Exchange Commission, a prospectus supplement and related base prospectus for the Notes Offering.

Citigroup Global Markets Inc., BofA Securities, Inc. and TD Securities (USA) LLC have served as joint book-running managers for the Notes Offering. When available, copies of the prospectus supplement and related base prospectus for the Notes Offering may be obtained from Citigroup Global Markets Inc. c/o Broadridge Financial Solutions at 1155 Long Island Avenue, Edgewood, New York 11717, prospectus@citi.com and toll free at 1-800-831-9146; BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, North Carolina 28255-0001, Attn: Prospectus Department, dg.prospectus_requests@bofa.com and toll free at 1-800-294-1322; and TD Securities (USA) LLC toll free at 1-855-495-9846. Electronic copies of the prospectus supplement and related base prospectus for the Notes Offering will also be available on the website of the Securities and Exchange Commission at www.sec.gov.

This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. The Notes Offering may only be made by means of a prospectus supplement and related base prospectus.

About Diamondback Energy, Inc.

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including those relating to the expected timing of the closing of the Notes Offering. All statements, other than historical facts, that address activities that Diamondback assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Diamondback. Information concerning these risks and other factors can be found in Diamondback’s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q, 8-K, the preliminary prospectus supplement filed by Diamondback for the Notes Offering and any amendments or supplements thereto, which can be obtained free of charge on the Securities and Exchange Commission’s web site at http://www.sec.gov. Diamondback undertakes no obligation to update or revise any forward-looking statement.

Investor Contact:
Adam Lawlis
+1 432.221.7467
alawlis@diamondbackenergy.com

Source: Diamondback Energy, Inc.

FAQ

What is the purpose of Diamondback Energy's senior notes offering (FANG)?

Diamondback Energy is issuing $6.5 billion in senior notes to fund general corporate purposes, including the pending acquisition of Endeavor Parent, , debt repayment, and related expenses.

What are the details of the senior notes issued by Diamondback Energy (FANG)?

Diamondback Energy is offering senior notes with varying maturity dates and interest rates, totaling $6.5 billion in aggregate principal amount.

Who are the joint book-running managers for Diamondback Energy's senior notes offering (FANG)?

Citigroup Global Markets Inc., BofA Securities, Inc., and TD Securities (USA) are serving as joint book-running managers for Diamondback Energy's senior notes offering.

When is the expected closing date for Diamondback Energy's senior notes offering (FANG)?

The Notes Offering is expected to close on April 18, 2024, subject to customary closing conditions.

Where can investors obtain the prospectus for Diamondback Energy's senior notes offering (FANG)?

Investors can obtain the prospectus supplement and related base prospectus for the Notes Offering from Citigroup Global Markets Inc., BofA Securities, Inc., and TD Securities (USA) or on the SEC's website.