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Midland oil and gas producer Diamondback Energy acquires rival QEP Resources

Diamondback Energy has completed its all-stock purchase of rival QEP Resources, bolstering its position in West Texas’ prolific Midland Basin.

The Midland oil and gas producer announced Wednesday that it has acquired Denver-based QEP Resources after QEP shareholders approved the deal on Tuesday. QEP shareholders received 0.05 shares of Diamondback stock for each share of QEP stock.

When the deal was announced in December, QEP was valued at $2.29 per share, or $2.2 billion including debt. However, as oil prices rose with the rollout of coronavirus vaccines, QEP’s stock value more than doubled.

“This transaction, along with our recently completed acquisition of certain assets of Guidon Operating LLC, strengthens our Midland Basin Tier 1 inventory depth and positions us to allocate the majority of our capital to the high yielding Midland Basin for the foreseeable future. “Diamondback CEO Travis Stice said in a statement.

CONSOLIDATION: Expect more consolidation in the oil industry through mid-2021

The Diamondback deal is the latest in a wave of consolidation that has swept through the energy industry following the pandemic-driven oil slump. Oil and gas companies are combining and acquiring assets to better weather market ups and downs and uncertainties about the future of fossil fuels amid growing concerns about climate change.

Recent acquisitions include the takeover of Concho Resources by ConocoPhillip for $9.7 billion, the purchase of Parsley Energy by Pioneer Natural Resources for $4.5 billion and the acquisition of WPX Energy by Devon Energy for nearly 2 .6 billion.

Diamondback’s acquisition of QEP and Blackstone Group-owned Guidon Operating LLC last month brings its total leasehold interests in the Midland Basin to more than 276,000 surface acres. The agreements are also expected to generate at least $60 million in savings from efficiencies.

Through these deals, Diamondback has recovered 56 drilled but uncompleted oil wells and pipelines in the Permian Basin. Diamondback said earlier it may sell QEP’s assets in Canada’s Williston Basin to pay off its debt.

Diamondback shares fell 3% to $79.53 in Wednesday morning trading.