Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) has acquired a batch of gas-producing assets in East Texas, its fifth purchase in the central region of the US.
The FTSE 250 group will have a 52.5% working interest (WI) in the new wells for contributing 50% or US$50mln of the consideration. Partner Oaktree Capital will assign 5% of its WI to DEC.
Current production from the assets is an equivalent 3.7 MBoepd (thousand barrels daily) from 691 gross (346 net) operated PDP wells with the price a 1.4 times multiple of estimated underlying earning of US$35mln over the next 12 months.
The assets are close to those recently acquired in East Texas and Northwest Louisiana, said the statement, with the purchase to be funded from the company’s own cash resources.
Rusty Hutson, Jr, DEC’s CEO, added: “Our enlarged regional footprint complements our portfolio of high-quality assets and provides additional scale from which we can derive operational synergies as we optimise asset performance and the associated costs.
“We are pleased to once again partner with Oaktree to acquire assets with material upside potential available through Smarter Asset Management.”
Broker Peel Hunt added: "The acquisition was made at a very attractive price multiple of 1.4x NT M Adjusted EBITDA well below the average of 2.7x paid for the previous four Central Region acquisitions in 2021..
"The assets look a good fit for Diversified s portfolio, being 100% gas and with an estimated NTM decline rate of 7%.
"Oaktree participated in the transaction, providing Diversified with a 5% upfront promotion.
"The acquisition is to be funded for existing cash and debt facilities."
The broker has a 160p target price and 'Buy' rating.
Shares rose 2% to 116.1p.
-- adds comment, share price --