Viper Energy Partners LP, a subsidiary of Diamondback Energy Inc., has acquired acreage in the Midland and Delaware Basins.
In separate purchase agreements with unrelated third party sellers, Viper agreed to acquire mineral interests in 7,487 gross (601 net royalty) acres in the Midland Basin and 650 gross (142 net royalty) acres in the Delaware Basin, for approximately $111 million, subject to certain adjustments. These transactions include estimated August 2016 aggregate net production of approximately 500 boe/d and will increase Viper's footprint to a total of 5,357 net royalty acres assuming all acreage is acquired in the transactions.
The company consummated the acquisition of mineral interests in the Midland Basin with approximately 300 boe/d of estimated August 2016 net production on July 22, 2016. The acquisition of mineral interests in the Delaware Basin is expected to close in August 2016; however, the Delaware Basin transaction remains subject to completion of due diligence and satisfaction of other closing conditions.
Net proved developed reserves attributable to these two transactions, based on internal estimates as of the effective dates of such acquisitions, were approximately 1.6 MMboe. Viper believes that development potential within the footprint of the two most recently announced transactions includes 223 gross horizontal locations incorporating 7,500 foot laterals across multiple development horizons. Pioneer Natural Resources and a private operator serve as primary operators on the assets.
The company has commenced a public offering of seven million 7.0MM units with a 1.05MM share greenshoe to fund the acquisitions and pay down debt, noted Capital One Securities analysts. In a note following the announcement, the analysts pointed out that “FANG currently owns 88% of the VNOM units and has indicated that it will purchase up to 5.0MM units that are not purchased in this offering. We do not expect any change in FANG operating activity on Viper royalty acreage as a result of these latest VNOM acquisition.”
Credit Suisse Securities (USA) LLC is acting as sole book-running manager for the offering.
As of June 30, 2016, Viper had $51.5 million outstanding under its $175 million revolving credit facility. As of July 22, 2016, Viper had $132.5 million outstanding under this facility as a result of additional borrowings used to fund the acquisitions it completed in July 2016.