MIDLAND, Texas - Diamondback (NASDAQ:FANG) Energy, Inc. (NASDAQ: FANG), an independent oil and natural gas company, has initiated a secondary public offering of 11.27 million shares held by certain Legacy Endeavor Stockholders. The company, however, will not receive any proceeds from this sale. Concurrently, Diamondback announced its intention to repurchase 2 million shares as part of its existing buyback program, using its available cash.
The Legacy Endeavor Stockholders have also provided the underwriters a 30-day option to buy an additional 1.39 million shares. Evercore ISI, Citigroup, and J.P. Morgan are serving as joint book-running managers for the offering.
This move comes as part of a broader strategy by Diamondback to manage its share capital. The repurchase transaction is expected to be funded from the company's existing cash reserves, and no compensation will be provided to the underwriters for the shares Diamondback plans to repurchase.
The shares are being offered through an automatic shelf registration statement previously filed with the U.S. Securities and Exchange Commission. The offering is being made only by means of a prospectus supplement and the related base prospectus.
Diamondback, headquartered in Midland, Texas, is focused on the exploration and exploitation of unconventional oil and natural gas reserves in the Permian Basin. The company's strategy includes the development and acquisition of oil and natural gas resources in this region.
The press release also contains forward-looking statements regarding the company's future performance, business strategy, and other operational plans. These statements are subject to risks, uncertainties, and assumptions that may cause actual results to differ materially.
Investors interested in the secondary offering or seeking further information can obtain copies of the prospectus from the joint book-running managers. This news article is based on a press release statement from Diamondback Energy.
In other recent news, Diamondback Energy's acquisition of Endeavor Energy Resources has been completed, a move that has been recognized by analysts from KeyBanc Capital Markets and Mizuho Securities as a significant enhancement to the company's position in the North American oil market. Both firms have maintained positive ratings on the company's shares, with KeyBanc keeping an Overweight rating and Mizuho maintaining an Outperform rating. Meanwhile, Jefferies has reinstated coverage on Diamondback Energy with a Hold rating.
In line with these developments, Viper Energy (NASDAQ:VNOM), a subsidiary of Diamondback Energy, has announced the acquisition of Tumbleweed Royalty assets for $650 million. This move is expected to strengthen its position in the Permian Basin. To fund this acquisition, Viper Energy is offering 8.5 million shares of its Class A common stock, managed by Goldman Sachs & Co. LLC, BofA Securities, and Truist Securities.
These acquisitions come as Diamondback Energy and Viper Energy, among other U.S. shale companies, are achieving higher crude oil production levels despite using fewer rigs. In its second quarter 2024 earnings call, Diamondback Energy highlighted its operational efficiencies and financial flexibility, announcing increased production guidance and a raised capital expenditure budget.
InvestingPro Insights
As Diamondback Energy (NASDAQ: FANG) navigates through a significant secondary public offering and share repurchase, investors are closely monitoring the company's financial health and market performance. Here are some InvestingPro Insights to provide additional context:
InvestingPro Data highlights Diamondback's strong market presence with a market capitalization of $52.66 billion, reflecting its substantial size and investor confidence. Despite a high P/E ratio of 9.45, which suggests a premium valuation relative to current earnings, the company also boasts a robust gross profit margin of 79.36% over the last twelve months as of Q2 2024. This indicates efficient operations and a strong ability to generate income from sales.
Moreover, an important InvestingPro Tip for shareholders to consider is the company's consistent dividend payments over the past 7 years, coupled with a significant dividend yield of 6.07% as of the latest data in 2024. This is a testament to Diamondback Energy's commitment to returning value to its shareholders and its financial stability to sustain such payments.
For those interested in further analysis and additional InvestingPro Tips, there are 11 more tips available on the platform, providing a deeper dive into Diamondback's financials and market position. These insights could be particularly relevant for investors considering the company's stock in light of the recent developments.
Remember, these metrics and tips can be a valuable resource in making informed investment decisions, especially during times of corporate actions such as secondary offerings and share repurchases. Visit InvestingPro for Diamondback Energy for a comprehensive list of metrics and professional tips.
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