Oh. My. Word!!! It’s #mergermonday and I couldn’t be more happy to be back.  Diamondback Energy did a twofer… QEP, the public company long seeking a mate since the rejected $8.75/share offer from Elliott at the beginning of 2019 (oh, those were the days!) and Guidon, a Blackstone backed PE company who followed the “some cash and some stock” model.

This kills a lot of birds (in a humane way…). G&A reductions and other synergies save $80 mm. But equally important and to tie to a theme we’ve talked about a lot, all the rock worth owning is owned by someone in some capital structure that is only accessible by public companies using their stock. This adds 81,000 net acres, ~95,000 boe/d, and lets FANG, who I think is an excellent operator, expand their scale in the Midland basin (interestingly, they aren’t announcing QEPs “sticks on the map” number).

As FANG alluded to, they will harvest or divest, the Bakken asset (which means harvest because of the bid-ask spread that exists using cash for assets), and despite the significant debt they are picking up with QEP, on a “relative value” basis, the deal looks good for FANG.

I expect January to be busy and I expect MRO will be involved because in this game of musical consolidation, we are running out of chairs in round 1.