Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) (DEC) said it has completed the US$250mln acquisition of producing wells and facilities in its Central Region, in the United States, from Tanos Energy.
After making customary purchase price adjustments the net purchase price was US$244mln, the company noted in a statement.
“We are excited to complete another Central Region acquisition of accretive, high-quality assets, further increasing our operational scale in the region,” said chief executive Rusty Hutson in the statement.
DEC said the acquisition has added 17,000 barrels of oil equivalent production per day to the company's portfolio, with some 25mln barrels oil equivalent of proved developed producing (PDP) reserves across the acquired asset base.
On top of that, the company sees substantial upside potential within the acquired acreage with some 50 undeveloped well locations identified across the asset base, which according to DEC could yield some US$280mln of value to the portfolio.
Also acquired in the deal is a basket of hedge arrangements, which sees 60% of the acquired production with an average gas price-floor of US$3.80 per thousand cubic feet (Mcf) in 2023 compared to the wider DEC portfolio which is 80% hedged at US$3.65 per Mcf.
The acquisition was part-funded by proceeds of a recent US$163mln equity raise, along with cash on hand and existing borrowing facilities.
Hutson noted: “Leveraging the recent reduction in natural gas prices, the net purchase price equates to a low multiple of the assets' net annual cash flows and approximates a PV17 value.
“Having acquired the assets with a foundation of hedge protection, we will begin our usual asset-optimisation work while opportunistically adding to the hedge portfolio with an eye towards protecting and expanding already strong margins that underpin our tangible returns for shareholders through commodity price cycles and create long-term value.
“I would like to thank our lenders for their continued support, demonstrated by a 50% increase in the borrowing base of our sustainability linked loan, and our investors for their support during the concurrent equity raise, which collectively enhance our balance sheet and position us for continued success."