MIDLAND, Texas - Diamondback (NASDAQ:FANG) Energy, Inc. (NASDAQ: FANG), an independent oil and natural gas company, has agreed to sell WTG Midstream Holdings LLC to Energy Transfer LP (NYSE: NYSE:ET) for a total pre-tax consideration of approximately $375 million. The deal, which is subject to customary closing conditions and adjustments, is expected to be completed in the third quarter of 2024.
Diamondback, through its subsidiary Rattler Midstream (NASDAQ:RTLR) LP, has held a 25% interest in WTG Midstream since October 2021. The sale is reported to yield around 3.5 times the invested capital for Diamondback. The company plans to use the proceeds to reduce debt from its upcoming merger with Endeavor Energy Resources, L.P.
Travis Stice, Chairman and Chief Executive Officer of Diamondback, expressed satisfaction with the economic return from the partnership with WTG Midstream, highlighting the support provided by WTG's gas gathering and processing system to Diamondback's operations. He also anticipates a smooth operational transition and looks forward to expanding the relationship with Energy Transfer.
This transaction aligns with Diamondback's focus on the development and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin, West Texas. The company's strategy includes optimizing its asset portfolio and strengthening its financial position.
The press release also contains forward-looking statements regarding Diamondback's future operations and performance, which involve risks and uncertainties. The company cautions that actual outcomes could materially differ from those projected in any forward-looking statements.
The information for this article is based on a press release statement from Diamondback Energy, Inc.
InvestingPro Insights
As Diamondback Energy, Inc. (NASDAQ: FANG) navigates through its strategic sale of WTG Midstream Holdings LLC and the reduction of debt from its upcoming merger, the company's financial health and market performance remain key areas of interest for investors. Here are some insights based on real-time data and InvestingPro Tips:
InvestingPro Data shows that Diamondback Energy has a market capitalization of $34.5 billion and is trading with a price-to-earnings (P/E) ratio of 10.92, which closely aligns with the adjusted P/E ratio for the last twelve months as of Q1 2024 at 10.91. This suggests that the company's earnings are being valued consistently by the market. The gross profit margin stands at an impressive 82.49%, indicating strong profitability in terms of revenue versus the cost of goods sold.
Two InvestingPro Tips to consider are:
1. Diamondback Energy has been profitable over the last twelve months, which aligns with analysts' predictions that the company will remain profitable this year. This financial stability is a positive sign for investors looking for consistent performance.
2. The stock has experienced a significant price uptick over the last six months, with a 29.02% total return, and has delivered a strong return over the last year at 55.84%. This recent performance may interest investors seeking growth in their portfolio.
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