Diamondback Energy Announces Pricing of Upsized Secondary Common Stock Offering
Rhea-AI Summary
Diamondback Energy (NASDAQ: FANG) announced the pricing of an upsized secondary public offering of 12,770,000 common stock shares by certain Legacy Endeavor Stockholders. The gross proceeds are expected to be approximately $2.2 billion. Diamondback will not receive any proceeds from this sale. The offering is set to close on September 23, 2024, subject to conditions.
The Selling Stockholders have granted underwriters a 30-day option to purchase up to an additional 1,615,500 shares. Diamondback has agreed to repurchase 2,000,000 shares from the underwriters at the same price paid to the Selling Stockholders, funded from existing cash. Evercore ISI, Citigroup, and J.P. Morgan are acting as joint book-running managers for the offering.
Positive
- Upsized secondary offering indicates strong investor demand
- Gross proceeds of approximately $2.2 billion from the offering
- Company repurchasing 2,000,000 shares, potentially supporting stock price
Negative
- Dilution of existing shareholders due to large secondary offering
- No proceeds from the offering will be received by the company
Insights
Diamondback Energy's upsized secondary offering of 12.77 million shares at approximately
This transaction doesn't directly impact Diamondback's balance sheet, as proceeds go to selling stockholders. However, the
The upsized offering suggests strong investor appetite for Diamondback Energy stock, reflecting positively on the company's market position and the broader energy sector. The successful placement of 12.77 million shares with an option for an additional 1.62 million indicates significant institutional interest.
The timing of this offering is notable, coming amid volatile oil prices and increasing focus on renewable energy. Diamondback's ability to execute this large offering successfully suggests investor confidence in its business model and the ongoing relevance of traditional energy companies. The share repurchase component adds an interesting dynamic, potentially mitigating dilution concerns and supporting the stock price.
This secondary offering represents a significant shift in Diamondback's ownership structure, with Legacy Endeavor Stockholders reducing their stake. The transaction's size suggests a coordinated exit strategy, which could impact the company's governance dynamics. Investors should monitor any potential changes in board composition or strategic direction following this ownership change.
Diamondback's decision to repurchase 2 million shares concurrent with the offering is a prudent governance move. It demonstrates management's commitment to shareholder value and confidence in the company's prospects. However, the use of cash for this repurchase warrants scrutiny, especially in the context of the cyclical energy industry. Shareholders should assess the balance between capital returns and maintaining financial flexibility for future opportunities or downturns.
MIDLAND, Texas, Sept. 19, 2024 (GLOBE NEWSWIRE) -- Diamondback Energy, Inc. (NASDAQ: FANG) (“Diamondback”) announced today the upsize and pricing of an underwritten public offering of 12,770,000 shares of its common stock (the “Secondary Offering”) by certain Legacy Endeavor Stockholders (the “Selling Stockholders”). The gross proceeds from the sale of the shares by the Selling Stockholders will be approximately
The Selling Stockholders have also granted the underwriters a 30-day option to purchase up to an additional 1,615,500 shares of common stock.
In addition, Diamondback has agreed to purchase from the underwriters 2,000,000 shares of common stock that are the subject of the Secondary Offering at a price per share equal to the price per share to be paid by the underwriters to the Selling Stockholders (the “Share Repurchase”) under Diamondback’s existing share repurchase program. Diamondback plans to fund the Share Repurchase from existing cash on hand. The underwriters will not receive any compensation for the shares being repurchased by Diamondback in the Share Repurchase.
Evercore ISI, Citigroup and J.P. Morgan are acting as joint book-running managers for the Secondary Offering.
Copies of the written base prospectus and prospectus supplement for the Secondary Offering, when available, may be obtained from Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, 35th Floor, New York, New York 10055, by telephone at (888) 474-0200, or by email at ecm.prospectus@evercore.com; Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 (Tel: 800-831-9146); and J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, via email at prospectus-eq_fi@jpmchase.com.
The common stock will be sold pursuant to an effective automatic shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The Secondary 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.
Cautionary Note Regarding Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding the completion of the Secondary Offering, Diamondback’s future performance; business strategy; future operations (including drilling plans and capital plans); estimates and projections of revenues, losses, costs, expenses, returns, cash flow, and financial position; reserve estimates and its ability to replace or increase reserves; anticipated benefits of strategic transactions (including acquisitions and divestitures); and plans and objectives of management (including plans for future cash flow from operations and for executing environmental strategies) are forward-looking statements. When used in this news release or otherwise by Diamondback, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to Diamondback are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although Diamondback believes that the expectations and assumptions reflected in its forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond Diamondback’s control. Accordingly, forward-looking statements are not guarantees of future performance and Diamondback’s actual outcomes could differ materially from what Diamondback has expressed in its forward-looking statements. Information concerning these risks and uncertainties and other factors can be found in Diamondback’s filings with the U.S. Securities and Exchange Commission ("SEC"), including the registration statement, prospectus and prospectus supplement relating to the Secondary Offering and its reports on Forms 10-K, 10-Q and 8-K, each of which can be obtained free of charge on the SEC’s web site at http://www.sec.gov. Diamondback undertakes no obligation to update or revise any forward-looking statement unless required by applicable law.
Investor Contact:
Adam Lawlis
+1 432.221.7467
alawlis@diamondbackenergy.com
FAQ
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