Upstream

Diversified Energy agrees to buy U.S. upstream assets of Blackbeard

Diversified Energy

Diversified Energy announced this Monday it entered into an agreement to acquire certain upstream assets from Blackbeard Operating. The transaction is valued at a gross purchase price of $180 million.

Firstly, the assets to be part of the transaction locate at Blackbeard’s assets in the natural gas Barnett Shale play.

Secondly, the acquisition would add to Diversified Energy around 475 billion of cubic feet equivalent (Bcfe) of proved developed producing (PDP) reserves; and also, about 96 million cubic feet equivalent per day (MMcfepd) of net production.

Thirdly, the transaction will be completed by June 2021, as it is still subject to regulatory approvals. According to the company’s statement, Diversified Energy will utilize cash reserves and a draw on its revolving credit facility to complete the deal.

Moreover, the acquisition represents an entry point of Diversified Energy into the Barnett Shale area; however, it also extend the company’s presence on the newly identified Central Regional Focus Area (Central RFA).

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Diversified Energy expanding its footprint in the Appalachian Basin

In addition, this is not the first acquisition for the company in the Central RFA region; in fact, it is the second. It follows the purchase of certain Cotton Valley upstream assets; located in the Central RFA from Indigo Minerals for a gross price of $115 million.

Furthermore, with these two acquisitions, Diversified Energy is expected to have over 300,000 net acres of leasehold generating around 192 MMcfepd of net production in Central RFA. This area, as it offer significant similarities with the Appalachian Basin, offers a mature operating environment.

Also, it provides significant gas production from low-cost, low-decline well stock. In this regard, Diversified Energy CEO Rusty Hutson Jr. said. “Establishing a new operating basin complements the Company’s commitment to continue its acquisition strategy in Appalachia; while expanding the landscape of significant growth opportunities for Diversified to replicate its successful strategy.”

Finally, he also added. “These acquisitions serve as a solid springboard to a large opportunity set of accretive; long-life producing assets which will also contribute to strong shareholder returns and drive additional debt reductions.”

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