Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) told investors it has closed an asset backed securitisation (ABS) of substantially all of its remaining unsecuritised upstream producing natural gas and oil in Appalachia.
A US$445mln ABS note was issued to lenders, carrying a fixed coupon of 5.78% and a December 2030 maturity.
"We are pleased to close another fixed-rate, fully-amortising and liquidity-enhancing ABS, at a tighter spread to prevailing interest rates than our prior ABS notes despite a rising rate environment,” said chief executive Rusty Hutson.
“We are especially excited to include many new investors as we further expand the investor universe for high-quality E&P securitisations, and we look forward to working with these financial institutions including those that have invested in our prior securitisations.”
He added: “We plan to remain active in the ABS market given the supportive commodity price backdrop, strong investor demand for seasoned-issuers like Diversified and our desire to transition long-term assets from our RBL into low fixed-rate, fully-amortising notes."
DEC noted that it retains an undrawn reserves-based lending (RBL) borrowing base of around US$300mln.
It has seen a US$150mln increase in the company’s liquidity since it released its first-quarter trading update – as of 31 March 2022, it had US$500mln of liquidity and around US$200mln of cash.
The company also noted its "favourable" hedge structure which includes long-dated natural gas swaps and natural gas liquid swaps – with the company’s arrangements designed to provide downside price protection whilst preserving exposure to higher natural gas prices.