Diamondback Energy (FANG) is reportedly lining up a $5 billion deal to buy West Texas oil group Double Eagle.
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Deal Could Come Soon
According to a report in the Wall Street Journal Diamondback is in talks to purchase the energy producer, which is backed by private equity group EnCap Investments, with a deal potentially coming in the next few days. That is if the talks don’t fail or of another suitor expresses interest. Double Eagle based in Fort Worth owns more than 95,000 net acres in the Midland Basin. The company, said the Wall Street Journal, is one of the last large assets left in the Permian Basin which is the biggest oil field in the U.S.
Oil and Gas Consolidation
Diamondback Energy, headquartered in Midland, Texas, has a market value of around $46 billion. It is on something of an acquisition trail given its move last September to buy Permian producer Endeavor Energy Resources in a cash-and-stock transaction. The deal valued Endeavor at around $26 billion. This prospective new deal signals that consolidation in the sector could be heating up given the arrival of President Donald Trump into the Oval Office. One of Trump’s main mantras since his first day in charge, and before that in campaign speeches up and down the country, has been “Drill, baby, drill” offering succour to oil and gas firms but switching the lights off for renewable energy firms.
FANG shares were flat on the news. Since the start of the year the share price is down by around 5%.
Is FANG a Good Stock to Buy?
On TipRanks, FANG has a Strong Buy consensus based on 17 Buy and 4 Hold ratings. Its highest price target is $256. FANG stock’s consensus price target is $214.38 implying an 37.36% upside.
