Diversified Energy raises a further US$225mln as it doubles up in new focus area

Diversified Energy Company Plc (LON:DEC) confirmed it has raised US$225mln in a placing and retail offer as it advances its latest acquisition.

It is to issue 141.5mln new shares priced at 112p per share.

Proceeds will cover the cost of the newly announced Blackbeard acquisition which sees the company pick up another 820 wells producing 16,000 barrels oil equivalent per day in its recently established Central regional focus area. The deal consideration is US$166mln.

Blackbeard is the second package of assets to be acquired for the Central area, following the Cotton Valley acquisition which closed this week. The first deal gave the company 16,000 boepd of production across 780 net operated wells.

Chief executive Rusty Hutson highlighted the strong momentum that the company has quickly built in the Central area.

“With just two transactions, the Central RFA adds nearly a third to our daily production, and will benefit both from our Smarter Asset Management programmes and from the additional scale that future infill acquisitions will afford us to reduce costs and further improve already strong margins,” Hutson said.

“By largely funding these two initial acquisitions with equity and reducing our leverage to just 1.8 times Net Debt-to-Adjusted EBITDA, we have positioned ourselves with an even stronger balance sheet, in an acquisition-rich environment, with the ability to move quickly to build additional scale in a highly-accretive way for shareholders using our access to low-cost financing.”

DEC’s Central Regional Focus Area comprises Louisiana, Texas, Oklahoma and Arkansas.

The company sees it as having a similar footprint to Diversified’s existing Appalachia region and the assets available in the region also share similar asset characteristics.

In April, DEC said it sees a significant opportunity to grow scale through complementary bolt-on and/or larger deals.

The placing price represented an 8% discount to Thursday’s closing price, and 2.5% of the 30-day volume-weighted average price.

The retail offer sees further new shares sold to investors via the Primary Bid platform

Story by ProactiveInvestors