Report: Diamondback Energy (FANG.US) plans to spend US$5 billion to acquire Double Eagle V, continuing to increase its business footprint in the Permian Basin.

Diamondback Energy (FANG.US), the largest independent oil producer in the United States, is in talks to acquire privately held oil driller Double Eagle V for about US$5 billion, according to a person familiar with the matter. The sources said the two sides could announce the deal as early as this week. If completed, the transaction would further expand Diamondback's business footprint in the Permian Basin, the highest-producing shale oil region in the world. Double Eagle V is reportedly backed by private equity firm EnCap Investments, and the potential consideration may consist of cash and stock. The acquisition would also mark Diamondback's second purchase of Permian Basin oil and gas assets from the same team, following last year's acquisition of assets related to Double Eagle IV. However, as of now, the negotiations have not been formally finalized, and the transaction amount, specific asset scope and final deal structure remain to be confirmed. Double Eagle is led by Cody Campbell and John Sellers. The team they lead has founded and sold several shale oil companies in recent years, and is skilled at consolidating fragmented oil and gas blocks, developing asset value and selling at the right time. Double Eagle V is its latest project in the continued buildout of its Permian Basin position. The project reportedly secured about US$2.5 billion in equity investment commitments. Last year, Diamondback acquired certain subsidiaries of Double Eagle IV Midco LLC for about US$4.1 billion. According to a filing Diamondback submitted to the U.S. Securities and Exchange Commission (SEC), the acquisition was completed in April 2025, with consideration including about US$3.1 billion in cash and about 6.84 million shares of Diamondback common stock. The assets are mainly located in the Midland Basin, including about 40,000 net acres and 342 net horizontal drilling locations, providing resource reserves for the company to further develop its core production area. This is not Diamondback's largest asset expansion in recent years. In September 2024, the company completed its acquisition of rival Endeavor Energy Resources for total consideration of about US$27.4 billion, gaining about 362,000 net acres of Permian Basin assets. The transaction significantly expanded Diamondback's resource base and made it the third-largest oil producer in the region. In subsequent regulatory filings, the company said the Endeavor and Double Eagle acquisitions further strengthened its operational experience and achieved some operational synergies ahead of schedule. The potential acquisition would be the latest in a series of recent M&A deals in the Permian Basin. The basin, which spans West Texas and southeastern New Mexico, is the most important shale oil producing region in the United States. As the U.S. shale oil industry gradually matures, high-quality drilling blocks are increasingly becoming core resources sought by large producers. By acquiring adjacent or geographically close assets, companies can integrate land, infrastructure and drilling plans, improve capital efficiency and potentially reduce unit production costs. For large shale oil producers, scaling up is not only about increasing recoverable reserves and future output, but also about optimizing development pace, improving drilling and completion efficiency, and making more effective use of existing pipeline, transportation and water treatment facilities. Against the backdrop of oil price volatility and investor focus on capital spending discipline, owning larger-scale, more geographically concentrated core assets helps companies maintain cash flow and shareholder returns while controlling costs. Diamondback's business is entirely focused on the Permian Basin. Chief Executive Officer Kaes Van't Hof told investors earlier this month that the company is currently more focused on expanding its business footprint in the region than investing outside the Permian Basin. The remarks indicate that Diamondback prefers to drive growth by deepening its presence in familiar core production areas and acquiring assets with synergies, rather than rashly entering new oil and gas basins. In addition to oil and gas production assets, Diamondback has recently been strengthening its control over supporting infrastructure in the Permian Basin. On November 10, the company announced an agreement with private equity firm KKR (KKR.US) to jointly acquire a 70% stake in Deep Blue Midland Basin held by Five Point Infrastructure. Upon completion of the transaction, Diamondback and KKR will jointly hold all of Deep Blue's equity; Diamondback previously held a 30% stake in the company. Deep Blue is a full-cycle water infrastructure services company whose business covers water sourcing, transportation, storage, recycling and disposal. Diamondback CEO Kaes Van't Hof said Deep Blue's water system is critical to the company's core operations, which require reliable transportation of nearly 2 million barrels of water per day. Through the transaction, Diamondback can further secure the water transportation and treatment capacity needed for core oil and gas production, while establishing a strategic partnership with KKR to explore infrastructure investment opportunities arising from the expansion of energy and industrial activity in the Permian Basin. Although Diamondback and KKR did not disclose the specific financial terms of the Deep Blue acquisition, sources reported that the consideration for the 70% stake held by Five Point is estimated at about US$2.1 billion. The transaction is expected to be completed in the fourth quarter of 2026, subject to customary regulatory approvals and closing conditions. From the acquisition of Double Eagle IV and the integration of Endeavor, to the proposed acquisition of Double Eagle V, and now the joint water infrastructure investment with KKR, Diamondback's series of moves show that it is building a larger, more efficient and more integrated operating system around the Permian Basin. As the U.S. shale oil industry enters a mature stage, the focus of corporate competition is gradually shifting from simply expanding output to high-quality resource reserves, operational efficiency, supporting infrastructure and capital return capability. If the roughly US$5 billion transaction is ultimately completed, Diamondback's resource consolidation in the Permian Basin is expected to accelerate further.