(Alliance News) - Diversified Energy Company PLC on Wednesday said it was approved for a larger credit facility borrowing base due to higher commodity prices and added collateral from a recent acquisition.
The Birmingham, Alabama-based energy producer and distributor said its bank lending group led by KeyBank National Association completed the semi-annual review of its senior secured credit facility.
The bank group approved a larger USD825 million borrowing base, representing a USD200 million, or 32%, increase related to higher commodity prices as for one.
Another reason for the enlarged borrowing base was added collateral from the company's recently completed acquisition of Tapstone Energy Holdings LLC.
"The more than 30% increase in the credit facility borrowing base affirms our banks' trust in Diversified's stewardship and confidence in our assets to generate strong free cash flow to support our business, repay our borrowings, fund our environmental, social, and governance initiatives for our stakeholders and sustain our dividends for investors," Chief Executive Rusty Hutson commented.
Diversified on Wednesday said it completed its acquisition of Oklahoma-based gas producer Tapstone.
The Alabama-based gas and oil production company bought Tapstone for USD181 million. The deal, first announced in early October, consists of the acquisition of certain upstream assets, field infrastructure, equipment and facilities.
California-based asset manager Oaktree Capital Management LP was a co-investor in the acquisition. Diversified Energy said it funded its portion of the deal with a draw on its enlarged USD825 million credit facility.
The investment's current production stands at 12,000 barrels of oil equivalent per day from 660 operated wells.
Hutson said: "Having closed our fourth acquisition within the central region this year, we begin the efficient integration process of these high-quality assets. Alongside former Tapstone personnel who today join the Diversified family, we look forward to implementing our proven smarter asset management programme and to leveraging our enlarged regional footprint to capture operational synergies. At less than two times adjusted Ebitda, this highly accretive and attractively priced acquisition further solidifies our position as a leading consolidator of producing assets in the central region and enhances our cash flow to support our environmental, social and corporate governance initiatives, dividend distributions, debt reductions and further accretive reinvestment."
Shares were up 2.0% at 103.79 pence each on Wednesday morning in London.
By Heather Rydings; heatherrydings@alliancenews.com; Updated by Abby Amoakuh; abbyamoakuh@alliancenews.com
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Diversified Energy (DEC)