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Diamondback (FANG) to Buy Rest of Rattler in All-Stock Deal

Zacks Equity Research
·2-min read

Diamondback Energy FANG said last week that it reached a deal to buy the remaining 26% stake that it does not already own in its publicly traded pipeline business Rattler Midstream LP RTLR. The transaction is primarily aimed at simplifying the corporate structure of the oil and gas explorer.

FANG said that the all-stock deal would fold the outstanding units of Rattler Midstream into the parent at a ratio of 0.113 Diamondback Energy shares for each partnership unit, with the offer representing a premium of 17.3% based on the May 13 closing price. The firms said the deal will benefit both and allow them to take advantage of the combined entity's scale and streamlined structure.

Investors should know that Rattler Midstream was formed by Diamondback Energy to operate the Zacks Rank #2 (Buy) company’s Permian midstream assets. The partnership went public in 2019 and owned some 600 miles of pipeline to carry crude, natural gas, and drilling and waste water.

Diamondback Energy said the deal was approved by both the boards and is expected to close in the third quarter of this year.

Founded in 2007, Midland, TX-headquartered Diamondback Energy is an independent oil and gas exploration & production company with its primary focus on the Permian Basin, where it has around 414,000 net acres. Its activities are concentrated in the Wolfcamp, Spraberry, Clearfork, Bone Spring, and Cline formations. The upstream operator focuses on growth through a combination of acquisitions and active drilling in America's hottest and lowest-cost shale region.

Other Energy Picks

Apart from Diamondback, investors interested in the energy sector might look at Devon Energy DVN and Canadian Natural Resources CNQ.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Devon Energy: Devon Energy is valued at some $46.2 billion. The Zacks Consensus Estimate for DVN’s 2022 earnings has been revised 33% upward over the past 60 days.

Devon Energy, headquartered in Oklahoma City, OK, delivered an 8.1% beat in Q1. DVN shares have surged around 187.7% in a year.

Canadian Natural Resources: CNQ beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 17.6%, on average.

Canadian Natural is valued at around $71.5 billion. CNQ has seen its shares gain around 90.2% in a year.


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Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Rattler Midstream LP (RTLR) : Free Stock Analysis Report
 
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Zacks Investment Research