Diversified Energy Company, an oil and gas site owner, has acquired several operated natural gas wells in East Texas for $68 million (£52.3 million).
The FTSE 250 company purchased these assets from a regional operator. The acquisition includes a significant proved developed producing (PDP) reserve and is part of a larger sale in the region.
In addition, a third-party development firm will acquire additional undeveloped land from the regional seller for approximately $19 million (£14.6 million). Diversified will also acquire a minority five-percent stake in this land for $1 million (£800,000).
The combined transactions are expected to involve 331 wells, with around 69 percent of the gas volumes. Diversified estimates an operating profit of $19 million over the next year, which is 3.5 times the purchase multiple.
“The production profile of these assets complements our existing portfolio and operational strategy, featuring low annual production declines of approximately 15 percent for the coming year,” Diversified stated in a stock exchange announcement.
The funding for the acquisition will come from a mix of a new share issuance to the regional operator, totaling about $35 million (£26.9 million), and collateral from the newly acquired wells.
Diversified anticipates closing the acquisition in the fourth quarter of this year, with a break fee applicable if the deal falls through.
Diversified CEO Rusty Hutson Jr commented, “This acquisition enhances Diversified by expanding our presence in East Texas, increasing our scale, and improving our margins. It also underscores our ability to complete disciplined transactions at favorable valuations.”
“Partnering with a development company demonstrates our capability to structure transactions creatively and effectively, maximizing value and cash flow for our shareholders.”Source link
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Diversified Energy Company, an oil and gas site owner, has acquired several operated natural gas wells in East Texas for $68 million (£52.3 million).
The FTSE 250 company purchased these assets from a regional operator. The acquisition includes a significant proved developed producing (PDP) reserve and is part of a larger sale in the region.
In addition, a third-party development firm will acquire additional undeveloped land from the regional seller for approximately $19 million (£14.6 million). Diversified will also acquire a minority five-percent stake in this land for $1 million (£800,000).
The combined transactions are expected to involve 331 wells, with around 69 percent of the gas volumes. Diversified estimates an operating profit of $19 million over the next year, which is 3.5 times the purchase multiple.
“The production profile of these assets complements our existing portfolio and operational strategy, featuring low annual production declines of approximately 15 percent for the coming year,” Diversified stated in a stock exchange announcement.
The funding for the acquisition will come from a mix of a new share issuance to the regional operator, totaling about $35 million (£26.9 million), and collateral from the newly acquired wells.
Diversified anticipates closing the acquisition in the fourth quarter of this year, with a break fee applicable if the deal falls through.
Diversified CEO Rusty Hutson Jr commented, “This acquisition enhances Diversified by expanding our presence in East Texas, increasing our scale, and improving our margins. It also underscores our ability to complete disciplined transactions at favorable valuations.”
“Partnering with a development company demonstrates our capability to structure transactions creatively and effectively, maximizing value and cash flow for our shareholders.”
