FANG - Diamondback's double deals part of ongoing Permian Basin consolidation

Diamondback Energy's ([[FANG]] -1.9%) two deals today to buy two rivals for a combined $3.2B including debt is "a realization among small producers how difficult it is to deliver on returns expectations," Enverus M&A analyst Andrew Dittmar says.Sellers are having to accept low or no premium deals with a hoped-for payoff down the road if the buyer's stock appreciates, he says; Diamondback agreed to buy QEP Resources ([[QEP]] -3.5%) in an all-stock deal that values QEP at ~$2.29/share, a slight discount to Friday's close.Before Diamondback's deals, the premiums that oil company buyers paid for smaller rivals in 2020 - including Pioneer Natural Resources' proposed purchase of Parsley Energy and ConocoPhillips' acquisition of Concho Resources - averaged 8%, well below levels of recent years.Diamondback's deals today "do not contemplate an acceleration of drilling activity or higher oil volumes," Third Bridge's Peter McNally says. Instead they are "driven by the need to lower breakeven

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Diamondback's double deals part of ongoing Permian Basin consolidation