LONDON, UK: Diversified Energy Company (LSE: DEC) announced the acquisition of certain East Texas upstream assets and related facilities from a private seller.
The acquisition builds on Diversified Energy’s 2021 entry into the Central Region and expands its progress to replicate the Company’s proven business model with high margin, low-decline production that is geographically proximate to its existing assets.
Under the previously announced Strategic Participation Agreement, funds managed by Oaktree Capital Management, L.P. will make a non-operated working interest investment in the Acquisition and Oaktree will promote Diversified with 5% of its interest in the acquisition.
Accordingly, Diversified will obtain a 52.5% working interest in the acquisition for contributing 50%, or $50 million (prior to customary purchase price adjustments), of the purchase price. Cash consideration of $50 million is funded entirely with cash on hand and borrowings on the company’s revolving credit facility.
Commenting on the transaction, CEO Rusty Hutson, Jr. said: “With a compelling purchase multiple of 1.4 times net cash flow, this acquisition represents another accretive, fully cash and debt-financed acquisition that further demonstrates our status as a capable consolidator of low-decline producing assets within the Central Region.
Our enlarged regional footprint complements our portfolio of high-quality assets and provides additional scale from which we can derive operational synergies as we optimise asset performance and the associated costs. We are pleased to once again partner with Oaktree to acquire assets with material upside potential available through Smarter Asset Management. Having emerged as a significant operator in the Central Region with a proven track record of execution in Appalachia and a strong balance sheet, we are well positioned to capitalise on additional opportunities.”
Diversified Energy Company PLC is an independent energy company engaged in the production, marketing and transportation of primarily natural gas related to its synergistic US onshore upstream and midstream assets.