Published: November 12, 2021 |

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Diversified Energy Company has entered into conditional agreements to acquire certain upstream assets, field infrastructure, equipment, and facilities within the company’s Central Region from Tapstone Energy Holdings. Funds managed by Oaktree Capital Management will make a non-operated working interest investment in the acquisition. Total gross consideration, inclusive of Oaktree’s investment is $419 million.

This acquisition, which represents the third co-investment with Oaktree since May of this year, is strategically aligned with the company’s prior Central Region acquisitions.

“With a net purchase price of less than two times net cash flow, this acquisition represents another highly accretive, fully balance sheet-financed acquisition that further demonstrates our status as a capable consolidator of producing assets within the Central Region. Our enlarged regional footprint strengthens our portfolio with additional high-quality assets and added scale to drive synergies. We are pleased to once again partner with Oaktree to acquire assets at a compelling multiple and with material upside potential available through asset optimization,” said CEO Rusty Hutson, Jr.

“Replicating our success in Appalachia, we have quickly established ourselves as a significant operator in the Central Region, which positions us for additional growth. As we work to seamlessly integrate these assets, we look forward to welcoming Tapstone’s employees to the growing Diversified family,” added Hutson.

RAPIDLY BUILDING SCALE WITHIN CENTRAL REGION

The company signed a conditional plan of merger and purchase and sale agreement with the sellers on October 6, 2021, its fourth acquisition of producing assets within the company’s Central Region within the past five months. This acquisition demonstrates Diversified’s status as a capable consolidator, highlighting its ability to build regional scale at compelling valuations. As with the broader region, the Mid-Continent also benefits from a constructive regulatory environment and aligns with the company’s operating and ESG strategic initiatives. Diversified and Oaktree expect to close the acquisition in early December 2021 upon completing customary diligence.

Diversified’s expansion into the Mid-Continent producing area is a natural next step in further consolidating the Central Region and represents an entry into an established and well-developed area with strong economic fundamentals including high cash margins reflective of favorable takeaway pricing and competitive cost structure. The production weighted average well age of ~12 years complements the company’s target asset profile of mature, long-life and low-terminal decline wells.

Consistent with the company’s growth strategy, Diversified intends to retain Tapstone personnel who will assist with Diversified’s Smarter Asset Management program to optimize asset performance, reduce costs, and add value through realization of operational synergies within the Central Region.

About Diversified Energy Company
Diversified Energy Company is an independent energy company engaged in the production, marketing and transportation of primarily natural gas related to its synergistic U.S. onshore upstream and midstream assets.

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