Diversified Energy Company PLC has followed a successful strategy for increasing production and gaining additional assets. The company recently enhanced its portfolio by closing the acquisition of Crescent Pass Energy’s natural gas properties and facilities in eastern Texas. Diversified issued a news release pointing to an estimated purchase price of $106 million but $101 million after customary price adjustments.
The Crescent assets included in the sale contain approximately 170 billion cubic feet equivalent (Bcfe) of PDP reserves, which computes to nearly 28 million barrels of equivalent (MMboe). The assets generate an additional thirty-eight million cubic feet equivalent per day, adding to the value derived from the total asset package.
“We are excited to announce the completion of another attractively priced acquisition of Central Region assets which stands to benefit Diversified as a result of our continued growth in scale and density throughout the asset footprint,” said Rusty Hutson, Jr., Diversified CEO. “We are excited to on board our new employees from Crescent Pass and begin the process of efficient integration and deployment of Smarter Asset Management along with our sustainability initiatives across these assets, while adding robust cash flows that further support our business.”
Diversified’s Crescent Pass acquisition assets consist of 2,249,650 new shares issued to the seller and a cash consideration of $71 million backed by the acquired assets and existing liquidity. The company revealed those new shares account for almost 4.77 percent of Diversified’s presently held and issued share capital.
While the assets being acquired included 827 net-operated PDP wells, over five hundred miles of pipelines, and associated compression facilities are included. Diversified finds itself in a winning position from all flanks, with the acquisition including a portion of undeveloped acreage that aligns with the company’s ability to seize value and draw profits from non-core assets.
“The target assets are a perfect fit with our existing East Texas operations and offer meaningful opportunities for cost efficiencies upon completion of the acquisition,” Hutson said in a previous statement. “The accretive transaction adds scale to our Central region footprint and remains consistent with our strategy to focus on high-quality, low decline producing assets at attractive PV values where we can apply our Smarter Asset Management approach to enhance margins and grow free cash flow. The evolution of our funding sources, illustrated using direct equity issuance to the seller as a portion of the consideration, highlights the importance of our recent NYSE listing while providing additional financial flexibility. Our company has a long-standing demonstrated track record of delivering value to shareholders from our strategy of acquiring, optimizing, and managing mature producing assets, making us the Right Company at the Right Time.”
During the year’s first quarter, Diversified sold producing assets in Appalachia but retained a 20 percent minority interest while keeping its operational position. The transaction produced approximately $200 million based upon an Asset-Backed Securitization placed at the SPV and almost $30 million derived from the sale of an 80 percent equity interest in the SPV. While proceeds were earmarked, repaying previous funds borrowed under the company’s Sustainability-Linked Loan, that positioning shored up the company’s position to make future acquisitions possible.
Nick Vaccaro is a freelance writer and photographer. In addition to providing technical writing services, he is an HSE consultant in the oil and gas industry with twelve years of experience. Vaccaro also contributes to SHALE Oil and Gas Business Magazine, American Oil and Gas Investor, Oil and Gas Investor, Energies Magazine and Louisiana Sportsman Magazine. He has a BA in photojournalism from Loyola University and resides in the New Orleans area. Vaccaro can be reached at 985-966-0957 or nav@vaccarogroupllc.com.
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
- Nick Vaccarohttps://energiesmedia.com/author/nick-vaccaro/
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