Diversified Energy, a US-based oil and gas company, has closed the $106m acquisition of natural gas properties and related facilities in eastern Texas from Crescent Pass Energy.
Announced last month, the stock and cash deal includes 827 net operated proven developed producing (PDP) wells. This acquisition is set to add 38 million cubic feet equivalent per day (MMcfepd) of production, a 5% increase from the first quarter of 2024’s reported 723MMcfepd.
The assets are also expected to bring in approximately 170 billion cubic feet equivalent (Bcfe) of reserves, with a present value of $155m.
The new assets will complement Diversified Energy’s existing portfolio. The production profile has a low annual decline rate of around 9%, maintaining the company’s consolidated decline rate post-acquisition.
The deal includes over 805km of pipelines and compression facilities. It also features undeveloped acreage with potential growth opportunities, in line with Diversified Energy’s approach to non-core assets.
The assets are close to Diversified Energy’s current East Texas properties. This proximity allows for operational synergies and efficiencies, said the company.
The acquisition encompasses about 170,000 acres of commercially viable leasehold in East Texas and the Freestone Trend. Current net production is 38MMcfepd, with an estimated next twelve months adjusted EBITDA of $26m and a purchase price multiple of approximately 3.8 times.
The net consideration for the acquisition includes the issuance of 2,249,650 new US dollar-denominated ordinary shares to Crescent Pass Energy, subject to a standard commercial lock-up agreement, and $71m in cash.
The cash portion is funded through a senior secured bank facility backed by the acquired assets and existing liquidity. The new shares represent about 4.77% of Diversified Energy’s current issued share capital.
Diversified Energy CEO Rusty Hutson, Jr. said: “We are excited to announce the completion of another attractively priced acquisition of Central Region assets, which stands to benefit Diversified as a result of our continued growth in scale and density throughout the asset footprint.
“We are eager to welcome our new employees from Crescent Pass and begin the process of efficient integration and deployment of Smarter Asset Management, along with our sustainability initiatives across these assets, while adding robust cash flows that further support our business.”
