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US shale giant Diamondback Energy is working on a deal to expand its reach in Texas’ oil-rich Permian Basin by purchasing a drilling portfolio from Double Eagle worth around $5 billion.
The potential acquisition would be the latest in a series of deals in the Permian, the heart of the U.S. shale boom, where drillers are seeking additional acreage even as they grapple with volatile oil prices due to the ongoing conflict in Iran.
As part of the deal, Diamondback will pay about $5 billion to buy Double Eagle V, an entity backed by energy-focused private equity group EnCap Investments that has acquired assets in the Midland portion of the Permian, people familiar with the matter said.
The acquisition could be announced as early as early next week, according to the sources, who cautioned that timing or terms could change. The deal will likely include both cash and shares, they added.
Diamondback expanded into the Permian after its $26 billion cash-and-stock merger with Endeavor Energy Resources in 2024, which transformed the company from a midstream player into the basin’s largest independent oil and gas producer.
Last year, Diamondback purchased Double Eagle IV, a former EnCap-backed company, in a cash-and-stock deal valued at about $4.1 billion, adding 40,000 net acreage in the Midland Basin.
The team behind Double Eagle has been a prolific asset accumulator throughout the Permian Basin, aggregating small parcels of acreage, one deal at a time, with the goal of selling the combined set of assets for a profit. Double Eagle V was formed last year with an equity commitment of $2.5 billion.
Kaes Van’t Hof, Diamondback’s chief executive, told the FT in September that he was considering smaller-scale transactions in the Permian rather than larger strategic acquisitions.
He said the company could consider expanding its acreage in the Delaware portion of the Permian Basin, but “we have to be patient.”
“This volatility and higher prices, that’s when companies tend to make mistakes in these environments… All of our peers are going to be pretty well funded as well, and that usually means someone is going to make a mistake,” he added.
Diamondback, Double Eagle and EnCap did not immediately respond to requests for comment.
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