Diversified Energy Company Closes Value Enhancing Asset Sale

Diversified Energy Company

Diversified Energy Company PLC (LON:DEC, NYSE: DEC) has announced that it has closed an innovative transaction that has allowed the Company to unlock additional value from its current asset base at an attractive multiple while further enhancing liquidity and reducing leverage.

In summary, the Transaction consisted of the Company executing a sale of producing assets in Appalachia to a Special Purpose Vehicle (“SPV”; DP Lion Equity Holdco LLC) in which Diversified retained a 20% minority interest and operatorship of the Assets. The Transaction generated proceeds to the Company of approximately $200 million, comprised of an Asset Backed Securitization placed at the SPV and a sale of an 80% equity interest in the SPV for approximately $30 million.  Proceeds (net of transaction-related costs) were used to repay outstanding borrowings under the Company’s Sustainability-Linked Loan (revolving credit facility), resulting in an approximate 12% reduction in net debt, and for general corporate purposes.

The implied valuation of the Transaction represents a multiple of 5.7 times the expected hedged 2024 EBITDA of approximately $35 million.  The sold Assets owned by the SPV were previously included as collateral on the Company’s Sustainability-Linked Loan and had a PV-10 of approximately $230 million (gross production ~50 MMcfe per day) based on forward looking commodity prices, which resulted in the borrowing base for the Company’s revolving credit facility being redetermined to $305 million.

Rusty Hutson, Jr., CEO of Diversified Energy Company, commented: 

“This latest transaction further demonstrates the attractiveness of Diversified’s asset base that provides reliable production and consistency of cash flows. 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.”

We’ll keep you in the loop!

Join 1,000's of investors who read our articles first

We don’t spam! Read our privacy policy for more info.

Share on:
Find more news, interviews, share price & company profile here for:
Discover how Diversified Energy Company's 2024 Sustainability Report showcases innovative strategies in reducing emissions, enhancing safety, and supporting communities.
Diversified Energy Company PLC has announced a successful $300 million placement of senior secured notes, enhancing liquidity and supporting strategic investments in energy projects.
Diversified Energy Company PLC has launched a Share Buyback Program, aiming to repurchase up to £52.3 million in shares to enhance shareholder value.
Diversified Energy Company PLC (DEC) reports robust operational results for 2024, highlighting strategic acquisitions and growth in various energy sectors.
Diversified Energy Company has completed the acquisition of Maverick Natural Resources, enhancing its natural gas and liquids production capabilities.
Diversified Energy, FuelCell Energy, and TESIAC have formed a strategic partnership to deliver 360 MW of clean, reliable power to data centers in the Appalachians.

Search

Search