Diversified Energy Co PLC - Birmingham, Alabama-based energy producer and distributor - Agrees to buy certain upstream assets, and related infrastructure, in its newly identified "central regional focus area" from Blackbeard Operating LLC for initial gross aggregate consideration of USD180 million.
Company notes current net production of about 16 Mboepd, with 82% natural gas.
"This announcement follows the announcement on April 30 in relation to the conditional acquisition of certain Cotton Valley upstream assets and related facilities also located in the Central RFA from Indigo Minerals LLC," company says.
Cotton Valley deal was completed on Wednesday for USD135 million.
"The Central RFA has significant similarities with the Appalachian Basin, with mature operating regions of significant gas production, developed infrastructure and a fragmented operator landscape suited for consolidation. The addition of this new operating region provides a significant growth opportunity for Diversified to replicate its business model in the Central RFA," company adds.
Diversified also announces fundraising to help with its recent acquisitions and pay down some debt.
It adds: "The proposed fundraising is not conditional on the completion of the Blackbeard Acquisition. Should Diversified not complete the Blackbeard acquisition, the company will determine the most appropriate use of the net proceeds, including potentially paying down further amounts drawn on its RCF and/or investing in other acquisition opportunities aligned with its stated strategy."
The proposed fundraising will consist of the placing and retail offer of up to a maximum of 19.9% of its existing issued share capital. The number of shares to be issued and the price will be announced by the company at the close of the bookbuilding process. Company hopes to raise EUR8 million from retail offer.
Chief Executive Rusty Hutson says: "Today's announcement of our second acquisition in the newly defined Central Regional Focus Area evidences the strong momentum we have quickly built in an area poised for consolidation quite similarly to our experience in Appalachia, where we emerged as a highly capable buyer and operator of assets. With just two transactions, the Central RFA adds nearly a third to our daily production, and will benefit both from our smarter asset management programmes and from the additional scale that future infill acquisitions will afford us to reduce costs and further improve already strong margins.
"By largely funding these two initial acquisitions with equity and reducing our leverage to just 1.8 times net debt-to-adjusted Ebitda, we have positioned ourselves with an even stronger balance sheet, in an acquisition-rich environment, with the ability to move quickly to build additional scale in a highly-accretive way for shareholders using our access to low-cost financing. We now turn our attention to the systematic integration of the Indigo assets on which we closed earlier this week and to completing our diligence on the Blackbeard assets that we expect to close next month."
Current stock price: 122.20 pence
Year-to-date change: up 8.1%
By Paul McGowan; paulmcgowan@alliancenews.com;
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Diversified Energy (DEC)