Member Info for TerryM1

The interesting part for me is

"And it was a deal that took multiple years to negotiate and take hold."

So that means multiple years to sort the finance out and if this deal was expected why stretch DECs financials to breaking point on the many smaller deals competed just before this one, of course simple answer Rusty could just not resist buying up everything on every opportunity.

What does this deal mean for Diversified?

We’re doubling the size of our revenue with this deal. We'll be close to $2 billion in revenue annually, and we're increasing our free cash flow by 57%, so our combined free cash flow will be probably about $450 million. It's a big transaction.

What is an ideal transaction or acquisition for you, and are more acquisitions on the horizon?

We're not drilling wells; we're acquiring wells. We like to buy assets that have a lower decline profile, that are more mature, that we're able to hedge the production, lock in the prices for longer period of time, because we have visibility into what this production is going to be on those wells. This was an asset to fit that.

Consolidation is needed in the industry. I tell our guys all the time we’re either going to acquire and help to consolidate the industry, or we'll get acquired. It's just part of it. And, I think we're in a great position to be one of the acquirers at this point.

Do you plan on diversifying your assets?

Prior to this transaction, we were about 84% natural gas and 16% liquids, which is oil and natural gas liquids. After this deal, we're going to be about 28% liquids and 72% natural gas. So we're still a high concentration of natural gas, but we do have a higher liquids exposure than we had previously. Also, in November, we signed a contract with one of the LNG export facilities in Louisiana to sell them gas directly. We are starting to take — which is a big thing for the future — the LNG export capacity, where we're going to sell liquefied natural gas to other countries.

What are you watching for with the new presidential administration in the energy realm?

We need more pipelines. The Biden administration did everything it could to keep us from building pipelines and building infrastructure and drilling new wells. But we're a fossil fuel nation — whether they like it or they don't like it. I think it's going to be more about, over the next four years, getting permitting reform and regulatory reform where we can build pipelines and get the gas — like in West Virginia, Pennsylvania. Get a significant supply of natural gas up there. It needs to go to the Southeast. It needs to get to the Gulf Coast.

Do you have any particular concerns in that arena?

There needs to be something that stops the delays of these pipelines because it's getting to a point now where it's getting into national security. AI and data centers are going to be heavily dependent upon energy supply. We’ve got to make sure that we're generating the power necessary to own AI technology. We have a terrible grid that is in desperate need of repair and expansion. We don't have the energy supply, the fuels that we need to generate more power. Nuclear is an option, but it takes forever to get a nuclear plant built. So, the real solution is natural gas. I think the next four years are going be crucial in trying to figure out a way to resolve them.

Https://www.bizjournals.com/birmingham/news/2025/02/17/diversified-acquitision-behind-deal.html

From behind Paywall

Part 1

Behind the deal: Inside Diversified's $1.3B acquisition

•

Rusty Hutson

By Stephanie Rebman – Editor-in-Chief, Birmingham Business Journal

Feb 17, 2025

Diversified Energy Co. is in the midst of its largest acquisition ever — a $1.275 billion deal to purchase Houston-based Maverick Natural Resources.

The deal to acquire the oil and gas company focused on Texas and Oklahoma will close in the first half of the year.

And it was a deal that took multiple years to negotiate and take hold.

It is an important time for Diversified CEO Rusty Hutson, who started the company in 2021 from scratch and now guides his company as a Top 20 natural gas producer in the United States.

Diversified (NYSE: DEC), which specializes in owning leases where drilling takes place, currently has 60 to 70 employees in Birmingham and is prepared to boost the head count locally to get the job done post-acquisition. And Hutson might eventually have to ink a deal for more space near the current Meadow Brook headquarters along U.S. Highway 280.

The company currently operates or is preparing to operate in West Virginia, Pennsylvania, Ohio, Kentucky, Virginia, Oklahoma, Alabama, Texas, Louisiana and New Mexico, giving Diversified a huge national footprint.

The BBJ talked with Hutson about what led up to the deal, what’s next for him and what’s needed for the industry as a whole.

How has business fared for you since going public?

Since our public IPO back in 2017, which was in London, we became dual listed on the New York Stock Exchange. And so now we are traded both places. We did a structural listing so that the shares trade fungibly. Since 2017, we've done over $2.5 billion worth of acquisitions. We've raised about $1.2 billion in equity, primarily in London, over that period of time. The business has grown substantially. In 2024, we did $700 million of deals.

Can you tell us more about the scenes behind this new deal?

We've actually been talking to this company off and on for about three years. It's taken three years to get to a point where we were able to cut a deal. The thing about commodities is everything's volatile. Natural gas prices, oil prices — they're all over the place. Especially in 2022 and 2023 you saw a lot of volatility. That volatility is very difficult because you have this buyer-seller bogey that you're trying to cover. But they did a full process starting last summer, which we were involved in, and we were down to a couple last two people. We were able to work the deal out. We were looking at a deal that two years ago would probably cost us $1.81 or $1.9 billion. We bought it for $1.275 billion. The patience helped and definitely paid off.

GG

It certainly will now you have started posting again,

And when you think it can't get any worse GG appears but I suppose that was inevitable.

"Gas price still going up.|"

SP still going down, below $15 now without this last acquisition would be well north of $18s and with a more conservative/sensible acquisition policy would be well north of £22, that only £1.10 old money which is where were on the first of this latest set of aqucitsions and then Democrats in power, ARO issues without any thought of a Trump bounce.

At current SP yield on new shares 7.56% add in costs and this more than yield on highest priced debt, If interest rates drop should be able to refinance highest priced debt at lower level, you have to ask which idiot came up with this, you can make this up.

"A 4.1% dilution does not equate to the hammering today."

At present we have no idea what the offer price will be, as I said earlier if the offer price is low enough and does not have to be that much lower than the current SP when you factor in the costs of the placing the dividend payments could be the same or greater than the savings on interest payments. The question is why are they doing this and it looks like Rusty has messed up and can't get the finance for the latest deal, a deal too far. Then add in the fiasco of shares for dividends and you come to the conclusion that he is incompetent and that is without all of the other shenanigans of trashing dividends machine gun aqucitsions and lies all of which trashed the SP. It is not surprising shares being hammered as I said before with have a CEO on a power trip to be in charge of the biggest company he can, to do this he lies, paints himself and us into a corner and frankly does not give a dam about shareholder value, he is acting like a spoilt child not a CEO.

Jun_man

"If the books are oversubscribed, why haven't they put the placement price in the RNS. That's just odd."

Very good question, also how can the books be oversubscribed when this is a public offer and it is not open to the Public yet, are they just selling to their mates at a very low price before retail shareholders get a look in or even given a price, very much not right.

"With the additional shares being offered and the obvious dilution of the SP, how low will it go?"

Not well as we can see by the tanking SP.

JC01

Don't worry about companies leaving the LSE, we have got Rachel from complaints to sort it out after her success with inflation, borrowing costs, the economy her CV, expenses etc.

I seen a few of my companies go recently, BHP main listing, Woodside secondary listing and DH Smith taken over by IP, lots more to come.

Also we know what Rusty thinks of us, share offer only in US, we don't count.

BlackSteel

Like you sold some on the news but not anywhere near enough.

As I said earlier

"however there is the possibility he over reached and could not raise the cash and has put the shares up in a fire sale"

I think your are right Rusty could not get financing and now a fire sale.

I agree fundamentals look good but who now can trust Rusty, he lies and is proving himself incompetent, remember shares for dividends fiasco. Who buys shares in a company where you cannot trust the CEO and is proven lose cannon.

"Let’s hope they manage to pay off the most expensive debt first this time. Hopefully the 7.8 % stuff."

We can only hope but at what price, these new shares will be paying dividends at 7.58% at current SP and share offer price will have to be lower for anyone to buy, could end up paying out more in dividends than in debt and got to add in the cost of this offer, well done Rusty another great move to tank the SP for a long time ahead and we get this all for dividends which are falling in real terms against inflation. Where did Rusty go the collage, the Donald Duck school of Finance.

All uranium companies shares falling for few months now. Cameco from a high of $62.55 (somewhat over done IMO) to $46.6 along with U3O8, I know this market is very volatile but something not good going on. If peace in Ukraine (and I really hope so) this will not help.

From the link

"This structure provides Diversified with financial flexibility"

Which is more than I can say about my finances.

"What is happening to this share ?"

Freefall

JC01

In a way I glad your in my camp but would very much prefer to be wrong and not be losing so much money, only consolidation is a sold a chunk of shares this morning on the news, wish I had sold more.

Jim800

Don't think guessing, they just plan don't like it, the $17 share price has just galloped off into the sunset on trusty Rusty's horse..

Also don't think Rusty forgot to mention an equity raise does he just did not want to tell shareholders what was going on, however there is the possibility he over reached and could not raise the cash and has put the shares up in a fire sale. Either Rusty lied and messed it up.

Well I am sure Oakbloke and Macy think this is great along with the SP tanking, soon see articles from them telling what a good move this is.

HH up at 4.245, Oil up and SP in freefall well done Trusty Rusty.

The lower the price goes the lower the offer price will be, never seen an offer like this before from RNS saying "public offering price" but not saying what the price is or the underwriting price also this not an offer with a book building. Seems a total mess and markets don't like it

"In theory they should pile in with the buys"

I think this is the other way round, the new share will be offered lower than the market price as otherwise no one would buy, just buy in the market instead, the only question is how low will this go, will need know the offer price which seems to be missing from the RNS. All a bit up in the air at present and the market does not like uncertainly.

Ge0rge123

I think SP could drift lower now with Thames water issue and bad inflation figures, inflation expected to reach 4% over the summer as more of the governments changes kick in, NI increase, minimum wage, public sector pay rises, energy prices etc.