Diversified Energy acquires East Texas upstream assets
By Iain Gilbert
Date: Tuesday 26 Apr 2022
(Sharecast News) - Energy company Diversified Energy has acquired certain East Texas upstream assets and related facilities from a private seller for $50.0m in cash.
Diversified Energy said on Tuesday that the Acquisition built on its 2021 entry into the Central Region and expanded its progress to replicate the company's proven business model with high margin, low-decline production that was geographically proximate to its existing assets.
The FTSE 250-listed firm stated that under its previously announced strategic participation agreement, funds managed by Oaktree Capital will make a non-operated working interest investment in the acquisition and will promote Diversified with 5% of its interest in the acquisition. Accordingly, Diversified will obtain a 52.5% working interest for contributing just 50% of the purchase price.
Diversified added that the consideration represented a 1.4x multiple based on net purchase price and $35.0m of estimated next twelve months' adjusted EBITDA, before potential synergies.
Chief executive 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.
"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."
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