Diversified Energy to Acquire Canvas Energy for $500 Million
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Diversified Energy has entered into an agreement to acquire Canvas Energy for total consideration of approximately $550 million.
The acquisition adds complementary operated producing properties and acreage positions in Oklahoma, concentrated in Major, Kingfisher, and Canadian Counties. Included in the acquisition are approximately 23 high quality wells that have been turned to sales in the last 12 months.
“This purchase strengthens Diversified by further expanding our footprint in our Oklahoma operating area with targeted assets that are a perfect fit for increasing our scale, allowing for synergy capture and providing meaningful opportunities for margin enhancement, that ultimately will grow and bolster our cash flow,” said Diversified CEO Rusty Hutson, Jr.
“We are excited to leverage our strategic partnership with Carlyle for funding accretive acquisitions and are pleased with the collective team’s collaboration. This initial transaction serves as an important milestone in our relationship and we look forward to growing our combined portfolio of high quality assets,” added Hutson.
Importantly, this acquisition extends our proven track record of acquiring cash generating energy assets at attractive valuations. We remain committed to our capital allocation strategy and believe the accretive nature of this transaction on per share metrics creates significant long-term value for shareholders,” concluded Hutson.
The acquisition complements Diversified’s existing Oklahoma asset portfolio and is underpinned by high EBITDA margins of ~70 percent, contributing an estimated $155 million of NTM Adjusted EBITDA before any anticipated synergies.
Diversified’s established integration playbook and corporate infrastructure are anticipated to unlock significant and sustainable value with fast, effective, and efficient integration. Familiarity with the asset base and the combined operational density provides for significant expense saving opportunities supporting Diversified’s cash flow optimization focus.
Diversified Energy is an energy company focused on natural gas and liquids production, transport, marketing, and well retirement. Through its differentiated strategy, they acquire existing, long-life assets and invest in them to improve environmental and operational performance until retiring those assets in a safe and environmentally secure manner. Recognized by ratings agencies and organizations for its sustainability leadership, this solutions-oriented, stewardship approach makes Diversified the right company at the right time to responsibly produce energy, deliver reliable free cash flow, and generate shareholder value.
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