Oasis Closes Williston Basin Acquisition from Diamondback Energy

Oasis Petroleum Inc. closed on its acquisition of Diamondback Energy’s Bakken asset on Oct. 21, completing a strategic shift to the Williston Basin for the Houston-based independent E&P company.

“The closing of this asset acquisition allows us to integrate and drive significant value from our Williston Basin position, where we see long-term running room given our pro forma inventory depth,” Oasis CEO Danny Brown commented in a company release.

Oasis had initially announced the Williston acquisition in May, a month after Brown joined the company to serve as its CEO. The cash transaction with Diamondback, valued at approximately $745 million, was originally expected to close in July.

As part of a strategic shift, Oasis also exited the Permian Basin through the divestiture earlier this year of its position in three separate transactions with proceeds totaling $481 million.

“The closing follows Oasis’ Permian Basin exit in June,” Brown continued in the Oct. 21 release, “and represents a strategic portfolio repositioning, where we were able to buy assets for PDP value and sell assets for a significant premium to PDP value.”

With the closing of the Williston acquisition, Oasis’ pro forma volumes increase by approximately 50%, according to Brown who added that the company remains committed to increasing its fixed dividend in November by over 33% to $0.50 per share, or $2 per share annualized.

“Oasis has fundamentally aligned resources with our core competitive strengths and strategic focus of building a sustainable enterprise that generates attractive returns and significant free cash flow for the benefit of the company and shareholders,” he said.

Diamondback’s Bakken asset, which it had acquired through a $2.2 billion all-stock acquisition of QEP Resources, comprised of approximately 95,000 net acres that Oasis said materially enhances the scale of its core Williston Basin asset.

The acquired assets had an estimated net production of approximately 25,000 boe/d for full-year 2021 and were expected to add two to three years of top-tier locations competitive with Oasis’ existing top-tier assets.

Pro forma for the acquisition, Oasis, already one of the top Bakken producers, had about a 497,000 net-acre position in the Williston Basin, 98% HBP.

“We look forward to Oasis operating this asset in a manner consistent with our values: being respectful of, and engaging with, all of our stakeholders, including the Three Affiliated Tribes on the Fort Berthold Indian Reservation; showing commitment to our communities and the environment; and operating in a safe and sustainable manner,” he added.

According to the release, Oasis made a cash payment at closing to Diamondback of $511.3 million, net of the $75 million deposit paid in the second quarter that reflects customary purchase price adjustments to the transaction, which was valued at approximately $745 million with an effective date of April 1, 2021.

Oasis also announced on Oct. 21 the lenders under its senior secured revolving credit facility completed their regular semi-annual redetermination of the borrowing base, resulting in the borrowing base increasing from $400 million to $900 million. 

On Sept. 30, Oasis had a cash balance of approximately $818.9 million, undrawn and $400 million of unsecured notes. Pro forma cash adjusting for the acquisition would have been $307.6 million, the release said.

J.P. Morgan Securities LLC was strategic and financial adviser to Oasis on the acquisition and McDermott Will & Emery was its legal adviser. Goldman Sachs & Co. LLC was exclusive financial adviser to Diamondback and Latham & Watkins LLP served as its legal adviser.