Diamondback Energy (FANG.US) plans to spend $5 billion to acquire Double Eagle V, further expanding its business layout in the Permian Basin

According to the coverage from Zhitong Finance APP, according to a source familiar with the matter, 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, in a deal valued at around $5 billion. The insider stated that both parties could announce the transaction as early as this week. If completed, the deal would further expand Diamondback's presence in the Permian Basin, the world’s most productive shale oil region.

It is reported that Double Eagle V is backed by private equity firm EnCap Investments, and the potential transaction consideration may consist of both cash and stock. This acquisition would mark Diamondback’s second purchase of Permian Basin oil and gas assets from the same team, following the acquisition of assets related to Double Eagle IV last year. However, negotiations have yet to be formally concluded, and the transaction value, specific asset scope, and final structure remain to be determined.

Double Eagle is led by Cody Campbell and John Sellers. Under their leadership, the team has founded and sold several shale oil companies in recent years, excelling at integrating fragmented oil and gas blocks, developing asset value, and selling opportunistically. Double Eagle V is their latest ongoing project in the Permian Basin. According to reports, this project has secured approximately $2.5 billion in equity investment commitments.

Last year, Diamondback acquired some subsidiaries under Double Eagle IV Midco LLC for approximately $4.1 billion. According to filings submitted to the U.S. Securities and Exchange Commission (SEC) by Diamondback, the acquisition was completed in April 2025. The consideration included about $3.1 billion cash and roughly 6.84 million Diamondback common shares. The relevant assets are primarily located in the Midland Basin, comprising about 40,000 net acres and 342 net horizontal drilling locations, providing a resource base for the company’s further development in its core area.

This is not Diamondback’s largest asset expansion in recent years. In September 2024, the company completed its $27.4 billion acquisition of competitor Endeavor Energy Resources, gaining approximately 362,000 net Permian Basin acres. This transaction significantly expanded Diamondback’s resource base and made it the third-largest oil producer in the region. In subsequent regulatory filings, the company stated that the Endeavor and Double Eagle acquisitions further enhanced its operational expertise and accelerated the realization of certain operational synergies.

The proposed acquisition will be the latest in a series of recent M&A deals in the Permian Basin. Spanning West Texas and Southeast New Mexico, the basin is the most important shale oil producing area in the United States. As the U.S. shale oil industry matures, high-quality drilling blocks are increasingly becoming core assets coveted by large producers. By acquiring adjacent or geographically close assets, companies can integrate land, infrastructure, and drilling programs, improve capital efficiency, and potentially lower unit production costs.

For major shale oil producers, scaling up not only means increased recoverable reserves and future production, but also optimizing development pace, improving drilling and completion efficiency, and more effectively utilizing existing pipelines, transport, and water treatment facilities. Amid oil price volatility and investor scrutiny on capital discipline, owning larger, more concentrated core assets helps companies maintain cash flow and shareholder returns while controlling costs.

Diamondback’s operations are fully focused on the Permian Basin. Earlier this month, the company’s CEO, Kaes Van’t Hof, told investors that compared to investing outside the Permian, Diamondback is currently more focused on expanding its footprint in the region. This statement signals the company’s preference for growing by deepening its presence in familiar core areas and acquiring synergistic assets, rather than venturing into new oil and gas basins.

In addition to oil and gas production assets, Diamondback is also strengthening its control over Permian Basin-related infrastructure. On November 10, the company announced an agreement with private equity firm KKR (KKR.US), jointly acquiring a 70% stake in Deep Blue Midland Basin held by Five Point Infrastructure. Upon completion, Diamondback and KKR will together hold 100% equity in Deep Blue; Diamondback previously held a 30% stake in the company.

Deep Blue is a company providing full-cycle water infrastructure services, covering water sourcing, transportation, storage, recycling, and disposal. Diamondback CEO Kaes Van’t Hof stated that Deep Blue’s water system is vital to the company’s core operations, which require the reliable transport of nearly 2 million barrels of water daily. Through this deal, Diamondback can further secure water transportation and treatment capacity needed for core oil and gas production, while establishing a strategic partnership with KKR to explore infrastructure investment opportunities brought by the expansion of energy and industrial activities in the Permian Basin.

Although Diamondback and KKR did not disclose the financial terms of the Deep Blue acquisition, sources estimate that the consideration for acquiring Five Point’s 70% stake is about $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 acquiring Double Eagle IV and integrating Endeavor, to the proposed purchase of Double Eagle V and a joint infrastructure venture with KKR, Diamondback’s series of moves indicates it is building a larger, more efficient, and increasingly integrated operational system centered around the Permian Basin. As the U.S. shale oil industry reaches maturity, competitive focus is gradually shifting from purely increasing production to optimizing high-quality resource reserves, operational efficiency, infrastructure support, and capital return ability. Should this approximately $5 billion deal go through, Diamondback’s resource integration process in the Permian Basin is likely to accelerate further.