Diversified Energy to Acquire High-Interest Texas Natural Gas Assets from Crescent Pass Energy
TL;DR
Diversified Energy Company gains advantage through strategic acquisition of high-interest Texas natural gas assets, leveraging low corporate declines and capital intensity.
The acquisition involves purchasing high-working interest, operated natural gas properties and related facilities in eastern Texas, adding 170,000 acres of leasehold in East Texas and the Freestone Trend.
The acquisition secures long-term cash flows, emphasizes low decline rates for managing production levels, and focuses on adding value to shareholders through growth and future acquisitions.
The CEO of Diversified Energy highlights the importance of low decline rates and the use of company shares as part of the purchase price in a significant step towards leveraging equity in future acquisitions.
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Diversified Energy Company CEO Rusty Hutson Jr. has revealed plans for a conditional purchase and sale agreement to acquire high-working interest, operated natural gas properties and related facilities located in eastern Texas from Crescent Pass Energy. The transaction, slated to close in the third quarter of 2024, is set to enhance Diversified Energy's existing portfolio in East Texas, encompassing approximately 170,000 acres of commercially attractive leasehold in East Texas and the Freestone Trend.
In an interview with Proactive, Hutson detailed the current net production of these assets, which stands at 38 MMcfepd (6 Mboepd), with low annual declines of around 9%. This acquisition is notable for its industry-leading corporate declines and capital intensity, which Hutson noted are critical for managing annual production levels and securing long-term cash flows.
Hutson emphasized the company's growth strategy through acquisitions, focusing on assets that provide substantial value to shareholders. A key aspect of this transaction is the utilization of shares from Diversified Energy's US listing as part of the purchase price. This marks a significant milestone in the company's strategy to leverage its equity for future acquisitions, potentially setting a precedent for similar deals.
This acquisition not only strengthens Diversified Energy's operational footprint in East Texas but also aligns with its broader strategic goals. By securing assets with low decline rates, the company aims to ensure stable and predictable production, which is crucial for long-term financial health and shareholder returns.
The deal underscores Diversified Energy's commitment to expanding its asset base in a manner that is both financially prudent and strategically beneficial. As the company continues to execute its growth-through-acquisition strategy, this transaction could serve as a model for future acquisitions, particularly in leveraging equity to fund such deals.
For more details, you can view the source version of the announcement on newsdirect.com: https://newsdirect.com/news/diversified-energy-announces-strategic-acquisition-of-high-interest-texas-natural-gas-assets-262512018
Curated from News Direct
