Diamondback Strengthens Midland Basin Presence with Strategic $238M TRP Acquisition Following Endeavor Merger
Diamondback, an independent oil and natural gas company headquartered in Midland, Texas, continues to strengthen its presence in the Midland Basin through targeted asset acquisitions and high-yield operational activity. Following its merger with Endeavor Energy Resources in September 2024, Diamondback further bolstered its Midland Basin footprint through a significant transaction with TRP (Figure 1). Using insights from TGS Well Data Analytics, we can identify the high-performing formations within these new assets and estimate production potential from undeveloped locations.
Figure 1. TGS Well Data Analytics application showing the Diamondback, Endeavor and TRP Permian Basin assets.
Announced on November 3, 2024, this deal involves Diamondback exchanging specific Delaware Basin assets and paying approximately $238 million in cash for TRP’s Midland Basin assets. Through this asset swap, Diamondback will acquire TRP’s Midland Basin assets, which include 15,000 net acres in Upton and Reagan counties with 55 undeveloped operated locations and 18 Drilled Uncompleted Wells (DUCs). In return, TRP will receive Diamondback’s Proved Developed Producing (PDP) heavy Vermejo asset in the Delaware Basin along with a cash payment.
The acquisition enhances Diamondback’s flexibility in capital allocation. The transaction, expected to close in December 2024, is projected to be accretive to both Cash Flow and Free Cash Flow per share, reinforcing Diamondback’s near-term oil production profile and solidifying its position as a major player in the Midland Basin. Per Diamondback Energy’s Nov 4 letter to stockholders, they are on track to hit their target number of new wells despite dropping active rigs from 24 down do 18, a feat they attribute to “continued efficiency gains”. This asset swap will allow them greater flexibility to allocate rigs to high value acreage. The newly acquired 55 undeveloped locations would contribute to their Q4 2024 goal of 470-475 MBO/d.
Diamondback’s capital program strategically targeted several intervals within the Permian Basin, concentrating on the Midland Basin. In 2024, the company drilled 211 wells in the Midland Basin and 24 in the Delaware Basin, surpassing previous goals. Diamondback brought 267 wells online in the Midland Basin and 15 in the Delaware Basin , covering key formations such as Lower Spraberry (72 wells), Wolfcamp A (61 wells), Wolfcamp B (45 wells), Middle Spraberry (34 wells), and Wolfcamp D (9 wells) among other formations.
According to TGS Well Data Analytics (Figure 2), which uses lateral-length normalized oil production type curves grouped by TGS Landing Zones, Diamondback’s Midland Basin assets show the highest production type curves in the Lower Spraberry and Wolfcamp A formations, followed by Wolfcamp B. This aligns with Diamondback's 2024 focus on these high-yield targets. A similar analysis of TRP wells (Figure 3) shows a comparable trend, with most TRP wells landing in Wolfcamp A and B, and a few recent new wells targeting the Lower Spraberry formation. This may signal increasing activity in Lower Spraberry going forward.
Figure 2. TGS Well Data Analytics application showing the Diamondback’s Midland Basin Type Curve comparisons by formation
Figure 3. TGS Well Data Analytics application showing the TRP’s Midland Basin Type Curve comparisons by formation
This deal allows Diamondback to focus on its core strengths in the Midland Basin, where it can drive more immediate growth. By trading a PDP-heavy asset in the Delaware Basin for TRP’s Midland Basin acreage with more undeveloped locations that are primed for near-term development. The new asset is expected to boost cash flow in 2025 and improve Diamondback’s overall inventory quality by adding high-potential drilling locations close to its existing operations.
With TGS Well Data Analytics, this type of comparative analysis and benchmarking can be done in minutes. For more information on Well Data Analytics or to schedule a demo, contact us at WDPSales@tgs.com.
