Diamondback Energy rounded off a tumultuous year for the US shale industry with the acquisition of two rivals for about $1.4 billion that will expand the company’s position in the Permian Basin.
Diamondback agreed to buy shale explorer QEP Resources in an all-stock deal that values the target at $2.29 per share, or about $555 million, the buyer said on Monday in a statement.
Separately, Diamondback announced the purchase of closely-held Guidon Operating. That cash-and-stock transaction values Guidon, which was co-founded in 2016 by funds managed by Blackstone Group, at about $862m.
“These trying times can present great opportunities for companies that are prepared,” Diamondback chief executive Travis Stice told analysts and investors during a conference call. “These acquisitions check every box when it comes to Diamondback’s corporate development strategy.”
The acquisitions are a bet by Texas-based Diamondback on the resilience of the shale sector, where production has dropped following this year’s historic collapse in crude prices. The deals are Diamondback’s largest since its $7bn takeover of Energen Corporation in 2018, and will bring its total leasehold interests to over 276,000 net surface acres in the Permian’s Midland sub-basin.
Diamondback said QEP’s assets in the Williston Basin in the Dakotas and Montana are “non-core” and will be used as a cash generator or sold off. Diamondback shares dropped 6.7 per cent to $42.76 at 10.06 am in New York on Monday. QEP fell 9.1 per cent to $2.10.
Although the assets to be acquired represent a “solid fit” with Diamondback’s existing operations, “these deals add nearly $2bn in net debt to [its] balance sheet, which is not exactly what we think the market is looking for the company to do right now and is counter to the company’s plan to prioritise absolute debt paydown in 2021,” Leo Mariani, an Austin-based analyst at KeyBanc Capital Markets, wrote in a note to clients.
Prior to Monday’s announcements, Diamondback’s stock had almost doubled in the space of less than two months.
“Fortunately for us, the rally in the last couple of months has allowed us to have real conversations and get two deals done,” Diamondback chief financial officer Kaes Van’t Hof said during the call.
The moves appear to conflict with Diamondback’s most recent public statements about already holding sufficient scale to compete, analysts at Tudor, Pickering, Holt & Co wrote in a note to investors.
However, the deals align “with management’s acquisitive track record and comments about generally supporting industry consolidation”, according to the note. “The no-premium transactions add relatively top-tier exposure” to Diamondbacks’s existing asset base and ideally closes the book on any more deals in the near-term.
The specs
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Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
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Engine: 2.0-litre 4cyl turbo
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Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
THE BIO
Favourite holiday destination: Whenever I have any free time I always go back to see my family in Caltra, Galway, it’s the only place I can properly relax.
Favourite film: The Way, starring Martin Sheen. It’s about the Camino de Santiago walk from France to Spain.
Personal motto: If something’s meant for you it won’t pass you by.
CHELSEA SQUAD
Arrizabalaga, Bettinelli, Rudiger, Christensen, Silva, Chalobah, Sarr, Azpilicueta, James, Kenedy, Alonso, Jorginho, Kante, Kovacic, Saul, Barkley, Ziyech, Pulisic, Mount, Hudson-Odoi, Werner, Havertz, Lukaku.
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
UAE currency: the story behind the money in your pockets
COMPANY PROFILE
Initial investment: Undisclosed
Investment stage: Series A
Investors: Core42
Current number of staff: 47
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."
