Diamondback looks to sell Permian basin assets for $1 billion

(Bloomberg) – Diamondback Energy Inc. is looking to sell non-core assets in the western Permian Basin as the oil producer looks to cash in on an increasingly active deal market in U.S. shale.

The company is working with a financial adviser to seek a buyer for assets around Pecos County, Texas according to people familiar with the matter, who asked not to be identified because the process is confidential. No final decision has been made and Diamondback could opt to hold onto the assets, the people added.

While it’s not clear what the assets might fetch in a sale, Diamondback raised its non-core asset sale target to $1 billion from $500 million in February.

Diamondback rose 1.4% to close at $145.17 in New York trading Tuesday, giving the Midland, Texas-based company a market value of about $27 billion.

A representative for Diamondback declined to comment.

Deal activity in U.S. shale is picking up, as oil and gas producers look to add new inventory after shying away from dealmaking in recent years. Ovintiv Inc. agreed to buy assets in the Permian this month from EnCap Investments for $4.3 billion.

Most shale producers used record profits last year to pay down debt and are now in a position to buy in-production assets as well as undeveloped acreage that would extend their drilling locations.

Diamondback “is going to be patient and prudent when it comes to selling assets,” Chief Financial Officer Kaes Van’t Hof said on a conference call with analysts Feb. 22. The company is more likely to sell pipeline assets than exploration properties, he said. Two previous asset sales involved acreage that wouldn’t be developed for years, he said.