Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) has confirmed the closing of what it described as a “value adding asset sale”, which sees the disposal of producing assets in Appalachia to a special purpose vehicle (SPV), 20% owned by DEC, in a deal that generates US$200 million of proceeds.
Specifically, the assets were transferred into the SPV and the company subsequently sold an 80% stake in the vehicle, whilst retaining 20% and operatorship of the assets.
It noted that proceeds are being used to repay outstanding borrowings under its sustainability-linked revolving credit facility, resulting in a 12% reduction in DEC’s debt.
The implied valuation of the deal equates to a 5.7 times multiple of the DEC’s expected hedged earnings (EBITDA) for the asset in 2024 – which was US$35 million.
"This latest transaction further demonstrates the attractiveness of Diversified's asset base that provides reliable production and consistency of cash flows,” chief executive Rusty Hutson said in a statement.
“At an attractive multiple, this transaction has provided a path for the company to unlock additional value from our assets, reduce our outstanding debt, and enhance our liquidity."