On May 23, 2019, the Company completed its divestiture of 6,589 net acres of certain non-core Permian assets, which were acquired by the Company in its merger with Energen (as described below), for an aggregate sale price of $37 million. This divestiture did not result in a gain or loss because it did not have a significant effect on the Company’s reserve base or depreciation, depletion and amortization rate.

On July 1, 2019, the Company completed its divestiture of 103,750 net acres of certain conventional and non-core Permian assets, which were acquired by the Company in the merger with Energen (as described below), for an aggregate sale price of $285 million. This divestiture did not result in a gain or loss because it did not have a significant effect on the Company’s reserve base or depreciation, depletion and amortization rate.

On July 29, 2019, the Company entered into a definitive purchase agreement to divest certain mineral and royalty interests to Viper for approximately 18.3 million of Viper’s newly-issued Class B units, approximately 18.3 million newly-issued units of Viper LLC with a fair value of $497 million and $190 million in cash, after giving effect to closing adjustments for net title benefits (the “Drop-Down”). The mineral and royalty interests divested in the Drop-Down represent approximately 5,490 net royalty acres across the Midland and Delaware Basins, of which over 95% are operated by the Company, and have an average net royalty interest of approximately 3.2% (the “Drop-Down Assets”). The Drop-Down closed on October 1, 2019 and was effective as of July 1, 2019. Viper funded the cash portion of the purchase price of the Drop-Down Assets through a combination of cash on hand and borrowings under Viper LLC’s revolving credit facility.

On January 31, 2018, Tall City Towers LLC, a subsidiary of the Company, completed its acquisition of the Fasken Center office buildings in Midland, TX where the Company’s corporate offices are located for a net purchase price of $110 million.

On October 31, 2018, the Company completed its acquisition of leasehold interests and related assets of Ajax Resources, LLC, which included approximately 25,493 net leasehold acres in the Northern Midland Basin, for $900 million in cash and approximately 2.6 million shares of the Company’s common stock (the “Ajax acquisition”). This transaction was effective as of July 1, 2018. The cash portion of this transaction was funded through a combination of cash on hand, proceeds from the sale of mineral interests to Viper (described below under the caption “2018 Drop-Down Transaction”), borrowing under the Company’s revolving credit facility and a portion of the proceeds from the Company’s September 2018 senior note offering. See Note 10—Debt for information relating to this offering.

On August 15, 2018, the Company completed a transaction to sell to Viper mineral interests underlying 32,424 gross (1,696 net royalty) acres primarily in Pecos County, Texas, in the Permian Basin, approximately 80% of which are operated by the Company, for $175 million.

On October 31, 2018, the Company completed its acquisitions of leasehold interests and related assets, one with ExL Petroleum Management, LLC and ExL Petroleum Operating, Inc. and one with EnergyQuest II LLC, for an aggregate of approximately 3,646 net leasehold acres in the Northern Midland Basin for a total of $313 million in cash. These transactions were effective as of August 1, 2018 and were funded through a combination of cash on hand, proceeds from the sale of assets to Viper (described immediately above) and borrowing under the Company’s revolving credit facility.

On November 29, 2018, the Company completed its acquisition of Energen in an all-stock transaction (the “ Merger”), which was accounted for as a business combination. Upon completion of the Merger, the addition of Energen’s assets increased the Company’s assets to: (i) over 273,000 net Tier One acres in the Permian Basin, (ii) approximately 7,200 estimated total net horizontal Permian locations, and (iii) approximately 394,000 net acres across the Midland and Delaware Basins. Under the terms of the Merger, each share of Energen common stock was converted into 0.6442 of a share of the Company’s common stock. The Company issued approximately 62.8 million shares of its common stock valued at a price of $112.00 per share on

In connection with the closing of the Merger, the Company repaid outstanding principal under Energen’s revolving credit facility and assumed all of Energen’s long-term debt. See Note 10—Debt for additional information.

The Merger has been accounted for as a business combination, using the acquisition method. The following table represents the allocation of the total purchase price of Energen to the identifiable assets acquired and the liabilities assumed based on the fair values at the acquisition date resulting in no goodwill or bargain purchase gain.



	(In millions)
Consideration:
Fair value of the Company's common stock issued	$	7,136
Total consideration	$	7,136

Fair value of liabilities assumed:
Current liabilities	$	388
Asset retirement obligation	105
Long-term debt	1,099
Noncurrent derivative instruments	17
Deferred income taxes	1,425
Other long-term liabilities	7
Amount attributable to liabilities assumed	$	3,041

Fair value of assets acquired:
Total current assets	$	298
Oil and natural gas properties	9,361
Midstream assets	253
Investment in real estate	11
Other property, equipment and land	58
Asset retirement obligation	105
Other postretirement assets	3
Noncurrent income tax receivable, net	76
Other long term assets	12
Amount attributable to assets acquired	$	10,177

The Company has included in its consolidated statements of operations revenues of $102 million and direct operating expenses of $17 million for the period from December 1, 2018 to December 31, 2018 due to the acquisition.

The following unaudited summary pro forma consolidated statement of operations data of Diamondback for the years ended December 31, 2018 and 2017 have been prepared to give effect to the Merger as if it had occurred on January 1, 2017. The below information reflects pro forma adjustments for the issuance of the Company’s common stock in exchange for Energen’s outstanding shares of common stock, as well as pro forma adjustments based on available information and certain assumptions that the Company believes are reasonable, including (i) the Company’s common stock issued to convert Energen’s outstanding

shares of common stock and equity awards as of the closing date of the Merger, (ii) the depletion of Energen’s fair-valued proved oil and natural gas properties and (iii) the estimated tax impacts of the pro forma adjustments.

Additionally, pro forma earnings were adjusted to exclude acquisition-related costs incurred by the Company of approximately $37 million for the year ended December 31, 2018 and acquisition-related costs incurred by Energen of $59 million. The pro forma results of operations do not include any cost savings or other synergies that may result from the Merger or any estimated costs that have been or will be incurred by the Company to integrate the Energen assets. The pro forma financial data does not include the results of operations for any other acquisitions made during the periods presented, as they were primarily acreage acquisitions and their results were not deemed material.

The pro forma consolidated statement of operations data has been included for comparative purposes only and is not necessarily indicative of the results that might have occurred had the Merger taken place on January 1, 2017 and is not intended to be a projection of future results.



	Year Ended December 31,
	2018		2017
	(in millions, except per share amounts)
Revenues	$	3,532	$	2,196
Income from operations	1,559		900
Net income	1,320		875
Basic earnings per common share	$	7.54	$	5.26
Diluted earnings per common share	$	7.53	$	5.24

On February 28, 2017, the Company completed its acquisition of certain oil and natural gas properties, midstream assets and other related assets in the Delaware Basin for an aggregate purchase price consisting of $1.7 billion in cash and 7.69 million shares of the Company’s common stock, of which approximately 1.15 million shares were placed in an indemnity escrow. This transaction included the acquisition of (i) approximately 100,306 gross (80,339 net) acres primarily in Pecos and Reeves counties for approximately $2.5 billion and (ii) midstream assets for approximately $48 million. The Company used the net proceeds from its December 2016 equity offering, net proceeds from its December 2016 debt offering, cash on hand and other financing sources to fund the cash portion of the purchase price for this acquisition.

The following represents the fair value of the assets and liabilities assumed on the acquisition date. The aggregate consideration transferred was $2.5 billion, resulting in no goodwill or bargain purchase gain.



	(in millions)
Proved oil and natural gas properties	$	386
Unevaluated oil and natural gas properties	2,123
Midstream assets	47
Prepaid capital costs	4
Oil inventory	1
Revenues and royalties payable	(10		)
Asset retirement obligations	(2		)
Total fair value of net assets	$	2,549

The Company has included in its consolidated statements of operations revenues of $81 million and direct operating expenses of $24 million for the period from February 28, 2017 to December 31, 2017 due to the acquisition.

The following unaudited summary pro forma consolidated statement of operations data of Diamondback for the years ended December 31, 2017 and 2016 have been prepared to give effect to the February 28, 2017 acquisition as if it had occurred on January 1, 2016. The pro forma data are not necessarily indicative of the financial results that would have been attained had the acquisitions occurred on January 1, 2016.

The pro forma data also necessarily exclude various operation expenses related to the properties and the financial statements should not be viewed as indicative of operations in future periods.



	Year Ended December 31,
	2017		2016
	(in millions, except per share amounts)
Revenues	$	1,228	$	627
Income (loss) from operations	619		(13		)
Net income (loss)	473		(109		)
Basic earnings per common share	$	4.85	$	(1.45	)
Diluted earnings per common share	$	4.84	$	(1.45	)