Falling crude oil production from U.S. onshore oil plays has chopped some 900,000 barrels from daily output. As crude prices rose to more than $50 a barrel in June, rig counts began to increase as producers with uncompleted wells or acreage in sweet-spot fields figured they could make a profit at that price level.

The U.S. fields that have been able to support the most new activity are both in Texas: the Permian Basin and the Eagle Ford. The oil rig count has risen by 16 in the Permian Basin since early June, more than the total for all the other major plays combined. The message is clear: be there or be square.

Diamondback Energy Inc. (NASDAQ: FANG) announced Wednesday morning that it has agreed to acquire leaseholds and other assets in the southern Delaware (Permian) Basin for a total purchase price of $560 million. The company had nearly 85,000 net acres in the Permian Basin prior to this acquisition, with estimated proved reserves totaling 157 million barrels of oil equivalent. The newly announced acquisition is the company’s entry into the Delaware Basin.

Included in the acquisition are 19,180 surface acres along the Pecos River and net proved developed reserves of approximately 2.2 million barrels of oil equivalent. Diamondback noted that the acquired assets include 290 net identified potential horizontal drilling locations that support average laterals of about 9,500 feet.

The transaction is expected to close in September, and the seller is identified only as an unrelated third party.

Diamondback also raised its 2016 production guidance from a prior range of 32,000 to 38,000 barrels of oil equivalent per day to a new range of 38,000 to 40,000 barrels as a result of adding one rig in the second half of the year. The company also increased its capital spending guidance from a prior range of $250 million to $375 million to a new range of $350 million to $425 million.

To help finance the deal, Diamondback is offering 5.5 million new shares of common stock at an as-yet unspecified price. The remainder will be funded with cash on hand.

Shares closed at $91.96 on Tuesday, placing a value of about $506 million on the offering. Shares traded down more than 2% Wednesday morning at $89.72, in a 52-week range of $55.48 to $96.01.

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