Diversified Energy to Acquire Operated Natural Gas Properties for $87 Million, Texas
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Diversified Energy Company has executed a conditional purchase and sale agreement for the acquisition of operated natural gas properties located within eastern Texas from a regional operator for approximately $68 million. The assets contain a significant proved developed producing (PDP) component, which will be purchased by Diversified.
Concurrently, an active third-party development company with operations in the area will purchase an additional amount of undeveloped acreage with a value of approximately $19 million, the majority of which will be purchased by the third-party development company, with Diversified maintaining only a minority 5 percent interest for $1 million in consideration.
The total purchase price to the seller, inclusive of both the PDP assets and undeveloped acreage is approximately $87 million before customary purchase price adjustments. The development company will pay cash consideration of approximately $18 million to directly to the seller at the closing of the acquisition.
“This purchase strengthens Diversified by expanding our footprint in our East Texas operating area, increasing our scale, and allowing for margin enhancement. Importantly, this acquisition extends our proven track record of completing disciplined transactions at attractive valuations,” said Diversified CEO Rusty Hutson, Jr.
“By joining resources with a development partner, we are highlighting our company’s ability to creatively and thoughtfully structure transactions that add value and maximize cash flow generation for shareholders,” added Hutson.
The company expects to close the acquisition in the fourth quarter of 2024.
The assets include 331 net PDP wells (total) and are expected to add 21 MMcfepd (4 MBoepd) of production and 70 Bcfe (12 MMBoe) PDP reserves with a PV-10 of $89 million. Additionally, the production profile of the assets is highly complementary to the company’s existing portfolio and operational strategy, with low annual production declines of ~15 percent for the next twelve months.
The assets are in close proximity to the company’s previously acquired East Texas assets and provide opportunities to realize synergies attributable to operating scale and asset density.
Diversified Energy is a leading publicly traded 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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