Item 1.01. Entry into a Material Definitive Agreement.
On October 19, 2021, Rattler Midstream Operating LLC ("Rattler OpCo"), a
subsidiary of Rattler Midstream LP ("Rattler"), entered into a definitive
purchase and sale agreement (the "Purchase Agreement") with Diamondback E&P LLC,
a Delaware limited liability company("E&P"), QEP Energy Company, a Delaware
corporation ("QEP"), and Guidon Anchor LLC, a Delaware limited liability company
("Guidon Anchor"), each a subsidiary of Rattler's parent Diamondback Energy,
Inc. ("Diamondback"). E&P, QEP and Guidon Anchor are collectively referred to
herein as the seller. The Purchase Agreement provides for Rattler Opco's
acquisition from the seller of certain water midstream assets (the "Assets") for
$160 million in cash in a drop down transaction. The Assets consist primarily of
produced water gathering and disposal systems, produced water recycling
facilities, and sourced water gathering and storage assets acquired by
Diamondback through transactions with QEP Resources, Inc. and Guidon Operating
LLC and certain of its affiliates in early 2021. Under the Purchase Agreement,
Rattler OpCo and the seller have also mutually agreed to amend their commercial
agreements covering produced water gathering and disposal and sourced water
gathering services to add certain Diamondback leasehold acreage to the Rattler
dedication. Rattler OpCo intends to fund the transaction with cash on hand and
borrowings under its revolving credit facility. The transaction, which was
approved by the Conflicts Committee of the board of directors of Rattler
Midstream GP LLC, the general partner of Rattler, is expected to close in the
fourth quarter of 2021, subject to customary closing conditions. Diamondback
beneficially owns all of Rattler's outstanding Class B units, representing
approximately 73% of Rattler's total units outstanding. Diamondback owns and
controls the general partner of Rattler.
The Purchase Agreement contains customary representations and warranties,
covenants and indemnification provisions of the parties.
The preceding summary of the Purchase Agreement is qualified in its entirety by
reference to the full text of the Purchase Agreement, a copy of which is
attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 7.01. Regulation FD Disclosure.
On October 21, 2021, Rattler issued a press release announcing the Purchase
Agreement described in Item 1.01 above. A copy of the press release is furnished
as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information
furnished under Item 7.01 of this Current Report on Form 8-K and the exhibit
attached hereto are deemed to be "furnished" and shall not be deemed "filed" for
the purpose of Section 18 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or otherwise subject to the liabilities of that section,
nor shall such information and exhibit be deemed incorporated by reference into
any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
Number Exhibit
2.1*# Purchase and Sale Agreement, dated October 19, 2021, by and among
Diamondback E&P LLC, QEP Energy Company and Guidon Anchor LLC, as
seller, and Rattler Midstream Operating LLC, as purchaser.
99.1** Press Release dated October 21, 2021, entitled "Rattler Midstream
LP, a Subsidiary of Diamondback Energy, Inc., Announces Drop Down
Transaction."
104 Cover Page Interactive Data File (formatted as Inline XBRL).
* Filed herewith.
** Furnished herewith.
# Schedules (or similar attachments) have been omitted pursuant to Item
601(a)(5) of Regulation S-K and will be provided to the Securities and
Exchange Commission upon request.
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