Acquisition marks company’s largest in 25 years, expands Permian Basin footprint and deepens Carlyle partnership

HOUSTON: Diversified Energy Company announced Thursday it has agreed to acquire Birch Permian Holdings Inc. from affiliates of Elliott Investment Management L.P. for approximately $1.8 billion, marking the largest acquisition in the company’s 25-year history.

The deal, expected to close in the fourth quarter of 2026, will add roughly 68,000 barrels of oil equivalent per day of net production from the Permian Basin, increasing Diversified’s production by approximately 35% and adjusted EBITDA by about 55%, according to company estimates.

“Birch has assembled one of the highest-quality operated asset positions, combining a concentrated footprint in the core of the Permian, substantial production scale, integrated infrastructure, and a track record of delivering predictable, high-margin cash flows,” said Rusty Hutson Jr., chairman and chief executive officer of Diversified Energy.

The acquisition includes approximately 480 net wells across roughly 46,000 net mineral acres in the Permian Basin, with proved reserves of about 1,168 billion cubic feet equivalent. Birch’s production is weighted approximately 38% oil, 32% natural gas liquids and 30% natural gas, with about 96% operated and an average lease net revenue interest of about 77%.

The purchase price represents about 3.3 times the next-12-month adjusted EBITDA, which Diversified estimates at approximately $548 million annually. The assets also include integrated midstream infrastructure, with 12 central production facilities, nine well gathering facilities and more than 60 miles of gathering pipelines, along with water disposal and recycling infrastructure.

Diversified plans to fund the acquisition primarily through an approximately $1.5 billion asset-backed securitization arranged through its partnership with Carlyle, supplemented by other customary financing sources including available liquidity under its revolving credit facility.

In a related development, Carlyle and Diversified agreed to expand their strategic partnership from the original $2 billion framework to pursue up to $10 billion of potential proved developed producing acquisition opportunities over time, subject to mutual agreement and transaction-specific approvals.

“We see significant opportunities emerging around long-life PDP assets and infrastructure-rich operated positions,” Hutson said. “Birch represents a perfect asset base for our focused and proven business model, providing immediate scale, strong cash returns, and a foundation for continued growth in the Permian for many years to come.”

The transaction, which includes a $50 million break fee, remains subject to customary closing conditions including regulatory approvals.

Gibson, Dunn & Crutcher LLP is serving as legal advisor to Diversified, with Truist Securities, KeyBanc Capital Markets and Citigroup serving as lead financial advisors. Moelis & Co. is serving as sole financial advisor to Birch.

The company will host a conference call on Sept. 3 at 8 a.m. Eastern Time to discuss the acquisition.