Diversified Energy agrees to acquire Maverick Natural Resources
By Josh White
Date: Monday 27 Jan 2025
(Sharecast News) - Diversified Energy announced an agreement on Monday to acquire Maverick Natural Resources, a portfolio company of EIG, for $1.275bn.
The FTSE 250 company said the acquisition would enhance its asset base, production scale, and commodity mix, while supporting its long-term strategy of generating sustainable free cash flow and shareholder returns.
It said the deal would combine complementary asset packages, bringing together Diversified's low-decline, capital-efficient production with Maverick's liquids-rich assets.
The acquisition was expected to result in a 95% increase in revenue and a 55% rise in free cash flow, alongside improved margins and cost synergies.
It said the combined entity would have an enterprise value of around $3.8bn and produce approximately 1,200 million cubic feet equivalent per day, or about 200,000 barrels of oil equivalent per day.
Diversified said its expanded portfolio now included a new position in the Northern Delaware Basin within the Permian, complementing its core assets in the Western Anadarko Basin.
The acquisition would enhance the company's operational flexibility through joint venture partnerships, offering exposure to multiple high-return development opportunities.
A portion of the acquired assets would directly offset Diversified's Cherokee Play operations, reinforcing the growth potential in a familiar operating region.
The transaction was also expected to strengthen Diversified's financial position through disciplined debt reduction, a fixed dividend policy, and strategic share repurchases.
Diversified said its hedging strategy, combined with the expanded asset base, was aimed at ensuring consistent cash flow generation and long-term value creation.
"This acquisition expands our unique and highly focused energy production company with a complementary portfolio of attractive, high-quality assets," said chief executive officer Rusty Hutson Jr.
"We have a proven track record of unlocking value from acquisitions while maintaining our commitment to sustainability leadership, and this acquisition provides us with great assets and employees that complement this strategy.
"The acquired producing assets have demonstrated leading well performance and are a natural fit with our operating advantage and existing acreage."
Hutson said the combined footprint in Oklahoma and the Western Anadarko Basin would create one of the largest in terms of production and acreage, including the emerging Cherokee formation.
"Diversified shareholders will share in the significant upside potential of the combined company, with its cash flow projected to provide durable and consistent returns and enabling significant debt reduction, further enhancing our long-term value creation proposition.
"We view commodity, geography, asset, and business segment diversification as strategic advantages that drive more resilient and consistent free cash flow and long-term value creation for our combined company.
"Diversified anticipates benefiting from the additional capital investment optionality for organic cash flow generation from joint venture partnerships that continue to optimize our combined high-quality asset base."
The company planned to leverage Maverick's experienced technical asset development team to unlock undeveloped acreage potential through an even larger combined footprint, Hutson explained, adding that he was confident that Diversified's management would bring its expertise in efficiently integrating acquisitions to further expand its 'Smarter Asset Management' practices.
"We have created a strong platform of people and financial resources to build and operate an organization that continues to be the right company at the right time to responsibly produce American energy, deliver reliable free cash flow, and drive shareholder value."
At 0817 GMT, shares in Diversified Energy Company were up 2.62% at 1,306.31p.
Reporting by Josh White for Sharecast.com.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN