Diversified Energy Company PLC, a leading publicly traded energy firm, has successfully completed a significant transaction, marking a strategic milestone in its financial and operational journey. The transaction, executed on the London Stock Exchange (LSE: DEC) and the New York Stock Exchange (NYSE: DEC), allowed the company to unlock additional value from its existing assets while simultaneously enhancing liquidity and reducing leverage.

Key Transaction Details: Enhancing Asset Value and Reducing Debt

– Sale of Producing Assets in Appalachia: The company sold its producing assets in Appalachia to a Special Purpose Vehicle (SPV), DP Lion Equity Holdco LLC. Diversified retained a 20% minority interest in these assets and continues to operate them.

– Significant Financial Gains: The transaction generated approximately $200 million for Diversified Energy Company. This sum includes an Asset Backed Securitization placed at the SPV and a sale of an 80% equity interest in the SPV for around $30 million.

– Debt Reduction and Use of Proceeds: Proceeds from the transaction, net of related costs, were used to repay borrowings under the company’s Sustainability-Linked Loan (revolving credit facility). This move resulted in an approximate 12% reduction in the company’s net debt, with remaining funds allocated for general corporate purposes.

Valuation and Impact on Sustainability-Linked Loan

The transaction’s implied valuation stands at a multiple of 5.7 times the expected hedged 2024 EBITDA of approximately $35 million. Additionally, the assets sold, previously collateral for the company’s Sustainability-Linked Loan, have a PV-10 of about $230 million. This valuation, based on forward-looking commodity prices, led to a redetermination of the borrowing base for the company’s revolving credit facility, now set at $305 million.

CEO’s Perspective on the Transaction

Rusty Hutson, Jr., CEO of Diversified Energy Company, highlighted the transaction’s significance: “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.”

Diversified Energy Company’s core focus is on natural gas and liquids production, transport, marketing, and responsible well retirement. The company’s strategy centers on acquiring long-life assets and improving their environmental and operational performance until their safe and environmentally secure retirement.

  Diversified Energy Company, USA