Aug. 09–The Midland oil producer Diamondback Energy said it will pay $1.2 billion for the assets of a Permian Basin-focused Houston startup.
Diamondback is effectively buying out the private equity-backed Ajax Resources in the cash-and-stock deal. Ajax was formed just three years ago in Houston.
Ajax was created to acquire the Permian acreage and operations of Houston’sW&T Offshore, which obviously opted to stick to offshore oil and gas. Ajax and its private equity sponsor, New York-based Kelso & Co., only paid $376 million for the nearly 30,000 acres in 2015 during the midst of the recent oil bust.
Since then, oil prices have recovered and the Permian has become the epicenter for global oil and gas growth, causing acreage values to skyrocket.
Diamondback is one of the fastest-growing Midland players focused on oil and gas production growth in the Permian. The acreage sold by Ajax is focused in Texas’Martin and Andrews counties just north of Midland and Odessa.
Diamondback Chief Executive Travis Stice said the company is acquiring top-tier acreage that Ajax has done a great job of developing in the last couple of years.
The company said it will pay $900 million in cash and about $300 million in stock for the Ajax operations. The deal is expected to close by the end of October.
“This transaction represents a logical transition for the Ajax asset base, as it complements Diamondback’s acreage position very well and further consolidates the Northern Midland Basin,” said Ajax CEO Rich Little. “With the strong sponsorship and support of our private equity partner, Kelso, we were able to deploy the necessary resources and capital to delineate and strategically develop an underexploited asset base.”
Ajax and Kelso again plan to eye new acquisitions to jumpstart the Houston company all over again.
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