Diversified Energy Announces Second Acquisition of Assets in Newly Defined Central Regional Focus Area
Rhea-AI Summary
Diversified Energy Company has announced a conditional agreement to acquire upstream assets in the Barnett Shale from Blackbeard Operating for $180 million. The transaction is expected to close in June 2021, subject to due diligence. Notable highlights include a ~3.5x multiple on ~$48 million of estimated NTM Adjusted EBITDA, ~475 Bcfe of PDP reserves valued at ~$238 million, and a 16% increase in production. This acquisition builds on the company's recent purchase from Indigo Minerals, expanding its Central Regional Focus Area and addressing growth opportunities in a mature operating environment.
Positive
- Acquisition price implies a ~3.5x multiple on ~$48 million estimated NTM Adjusted EBITDA.
- Increases PDP reserves by ~475 Bcfe valued at ~$238 million.
- Expected to provide ~96 MMcfepd production, boosting output by ~16%.
Negative
- Final terms of the acquisition are subject to ongoing diligence, introducing uncertainty.
- Funding through cash on hand and a draw on revolving credit may increase financial leverage.
News Market Reaction – DECPF
In the trading session that priced this news, DECPF declined 1.27%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
AI-generated analysis. How Rhea-AI works. Not financial advice.
BIRMINGHAM, AL / ACCESSWIRE / May 28, 2021 / London LSE-Listed Diversified Energy Company (LSE:DEC) ("Diversified" or the "Company"), announces that on May 21, 2021 it entered into a conditional agreement to acquire certain upstream assets in the natural gas Barnett Shale play from Blackbeard Operating, LLC ("Blackbeard" and such acquisition, the "Blackbeard Acquisition") for a gross purchase price of
The Blackbeard Acquisition represents an attractive entry point into the Barnett Shale and an extension of the Company's presence in its newly identified Central Regional Focus Area ("Central RFA") and demonstrates significant momentum towards building scale in this strategic area. Acquisition highlights include:
- Net consideration represents a ~3.5x multiple on ~
$48 million of estimated NTM Adjusted EBITDA (unhedged) before anticipated synergies - Adds ~475 Bcfe of PDP reserves valued at an estimated pre-tax PV10 of approximately
$238 million (~30% discount to the PDP PV10 vs. net consideration) - Adds ~96 MMcfepd (
82% natural gas) of net production, ~+16% of the Company's Q1 2021 net production
Today's announcement follows the Company's May 19, 2021 announcement of the closing on its acquisition of certain Cotton Valley upstream assets from Indigo Minerals LLC ("Indigo") also located in the Central RFA (the "Indigo Acquisition"). For the Indigo Acquisition and net of customary purchase price adjustments to the March 1, 2021 effective date, Diversified paid approximately
Through both acquisitions, Diversified has established a meaningful footprint in its Central RFA, with over 300,000 net acres of leasehold generating approximately 192 MMcfepd of net production and an aggregate
Recognizing the high transferability of its PDP-focused strategy, the Company identified the Central RFA for its significant similarities with the Appalachian Basin. Specifically, the region offers a mature operating environment and significant gas production from low-cost, low-decline well stock and an extremely fragmented operator landscape. Establishing a new operating basin complements the Company's commitment to continue its acquisition strategy in Appalachia while expanding the landscape of significant growth opportunities for Diversified to replicate its successful strategy.
Commenting on the Company's recently announced acquisitions, CEO Rusty Hutson Jr. stated,
"Having only recently announced our first acquisition in the new Central Regional Focus Area, I am excited to announce our second transaction that meaningfully expands our footprint in a prolific natural gas producing region and affords us a tremendous opportunity to build significant presence and scale that will begin to drive the same type of operating and cost synergies we enjoy in Appalachia. These acquisitions serve as a solid springboard to a large opportunity set of accretive, long-life producing assets which will contribute to strong shareholder returns and drive additional debt reductions. We look forward to closing the Blackbeard Acquisition in due course and, as has always been our practice to ensure operating continuity and swift integration into our Smarter Asset Management programs, welcoming the existing operations personnel who service the assets into the Diversified family."
For further information, please contact:
Diversified Energy Company PLC | +1 205 408 0909 |
Teresa Odom, Vice President, Investor Relations | |
Buchanan | +44 20 7466 5000 |
Financial Public Relations | |
Ben Romney | |
Chris Judd | |
Kelsey Traynor | |
James Husband | |
About Diversified Energy Company PLC
Diversified Energy Company PLC is an independent energy company engaged in the production, marketing and transportation of primarily natural gas related to its synergistic US onshore upstream and midstream assets.
SOURCE: Diversified Energy Company PLC
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https://www.accesswire.com/649551/Diversified-Energy-Announces-Second-Acquisition-of-Assets-in-Newly-Defined-Central-Regional-Focus-Area