Diamondback Energy Inc., laser-focused on the Permian Basin in Texas, has added more than 13,000 net acres to its portfolio in a $538 million deal.

The Midland, TX-based independent said Monday it would buy interests in the Permian's Midland subbasin, mostly acreage in Midland and Glasscock counties. The purchase, set to close in September, would give Diamondback a Midland subbasin leasehold of about 85,000 net acres.

"Much of the value in these assets resides in the undeveloped acreage and, as a peer-leading developer of horizontal resources, we believe we can more cost effectively convert this resource potential into cash flow," said CEO Travis Stice. "We believe this acreage to be some of the best in Diamondback's inventory, some of which offsets our Gridiron well, which appears to be among the best horizontal wells on a per lateral foot basis in the Midland Basin."

Net proved reserves in the leasehold (16,773 gross acres) are about 5.2 million boe and 88% operated. Net production in May was around 2,173 boe/d from 94 net (131 gross) producing wells.

The new acreage is designed to enhance output, which soared in 2Q2014. Average production between April and June increased 32% sequentially to 17,836 boe/d from 6,590. Average output for the second quarter year/year jumped 171% to 1.2 million bbl of oil from 447,000 bbl. Natural gas production more than doubled to 990 MMcf from 409. Natural gas liquids increased to 247,000 bbl from 84,000 bbl.

Horizontal development on the newly acquired leasehold represents "years of growth potential," with 256 net (396 gross) identified horizontal drilling locations in the Wolfcamp A, B and D (Cline formation) intervals, as well as the Lower and Middle Spraberry and Clearfork formations.

The purchase bolts on to leasing rights on more than 2,800 net acres purchased in February (see Shale DailyFeb. 19). Last September Diamondback also bought 12,500 net acres in Midland County.

Most of the new net acreage is in Glasscock County (6,814), with 4,773 net acres in Midland County and 1,402 in Reagan County, TX. It also has more than 100 acres in Upton County, TX.

Diamondback is bullish enough on its Permian operations that it increased full-year 2014 production guidance to 17,000-19,000 boe/d from 16,000-18,000 boe/d. The operator now plans to complete 18-22 wells per quarter in the second half of 2014. To accomplish the increased well count, Diamondback added a second dedicated fracturing crew on July 1.

Five horizontal rigs and one vertical rig now are running in the basin, with plans in early 2015 to add a horizontal on the existing acreage and one on the newly acquired acreage. An eighth horizontal rig is scheduled for the new leasehold by the second half of 2015, with an ninth in 2016.

Fifteen wells were completed overall in the second quarter, with 12 drilled in Wolfcamp B, two in the Lower Spraberry and one in the Clearfork.

Several wells are performing above expectations, said management.

Neal F Unit 8 No. 6LS well in Upton County, with a 6,811 foot lateral, has achieved a 24-hour initial production (IP) two-stream rate of 1,021 boe/d net (86% oil), with a peak 30-day average of 745 boe/d (83% oil).

Its best well to date in the acreage, the Gridiron N 1H Wolfcamp B well in Midland County was drilled with an 8,785 foot lateral and achieved a flowing peak 24-hour IP rate of 2,757 boe/d (91% oil), with a peak 30 day flowing rate of 2,317 boe/d (87% oil). The well has produced more than 190,000 boe (83% oil) in its first 100 days on production.

The first operated Lower Spraberry horizontal in Midland County, the ST NW 2501LS, had a 4,418 foot lateral and achieved a 24-hour IP rate of 1,049 boe/d (92% oil) with a peak 30-day average of 859 boe/d (83% oil).

The Crystal A Unit 1H, 2H and 3H Wolfcamp B wells were drilled on Diamondback's first three-well pad in 38 days, the producer noted. Drilling savings of $500,000-750,000 are estimated as a result of the multi-well pad, it said. It also has drilled its first horizontal Wolfcamp B well in Martin County acreage acquired in February. The Kimberly 804H, with a 7,300 foot lateral, was drilled in less than 16 days and is expected to be completed in the second half this year.