Midstream energy infrastructure firm Rattler Midstream LP (RTLR:NASDAQ), which owns and develops crude oil, natural gas and water-related midstream assets and provides oil and gas services in the Midland and Delaware Basins of the Permian Basin and Midland, Tex.-based independent oil and natural gas company Diamondback Energy Inc. (FANG:NASDAQ), today announced that "the two companies entered into a definitive agreement for Diamondback Energy to acquire all of the publicly held common units representing the limited partner interests in Rattler Midstream not already owned by Diamondback and its subsidiaries."
Under the terms of the all-stock merger agreement executed by both companies on Sunday, May 15, 2022, Rattler shareholders (public unit holders) will each receive 0.113 shares of Diamondback common stock for each Rattler common unit owned.
The report advised that the that the agreed upon exchange ratio equates to a price that is 17.3% above the closing price of Rattler common shares (units) on Friday, May 13, 2022, and represents a 9.3% premium over Rattler's preceding 30-day volume-weighted average share (unit) price.
Travis Stice, CEO of Diamondback Energy and of the general partner of Rattler Midstream commented, "The energy landscape has transformed dramatically since Rattler was taken public in 2019, and we believe this agreement to merge companies is in the best interests of both Diamondback and Rattler stakeholders…This merger will allow both companies to benefit from the simplicity and scale of the combined entity going forward."
The companies advised that the merger transaction is expected to close in Q3/22, subject to ordinary closing conditions. The firms noted that the Board of Directors of Rattler's general partner have already unanimously approved the transaction after the agreement was reviewed by the Board's Conflicts Committee and independent legal and financial advisors. Following this action, Diamondback's wholly owned subsidiary, Diamondback E&P LLC, which currently holds a majority of the outstanding units of Rattler, voted in favor of the merger.
Diamondback Energy is a leading independent oil and natural gas company based in Midland, Tex. The firm has a market cap of about $24 billion and is primarily involved in acquiring, exploring and developing oil and natural gas reserves in the West Texas Permian Basin. The company utilizes its unconventional onshore horizontal drilling assets to target the Clearfork, Spraberry, Wolfcamp and Bone Spring and Cline formations.
Rattler Midstream acquires, owns, develops and operates midstream and energy assets in the Permian Basin. The company also offers oil and gas services under mostly long-term, fixed-fee contracts to its largest affiliate investor Diamondback Energy as well as to other third-party clients. The firm operates crude oil pipelines and storage facilities and owns water gathering and distribution pipeline systems that connect crude oil and natural gas wells to its produced water disposal well sites in the Midland and Delaware Basins.
Rattler Midstream LP started the day with a market cap of around $490.2 million with approximately 38.15 million shares outstanding and a short interest of about 2.2%. RTLR shares opened more than 14.00% higher today at $14.27 (+$1.85, +14.40%) over Friday's $12.85 closing price and reached a new 52-week high price this morning of $15.19. The stock has traded today between $14.27 and $15.19 per share and is currently trading at $14.81 (+$1.96, +15.25%).
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