Diversified Energy buys Elliott-owned Birch Permian for USD1.8 billion

(Alliance News) - Diversified Energy Co on Thursday announced that it has agreed to acquire Birch Permian Holdings Inc and certain affiliated companies from affiliates of activist investor Elliott Investment Management LP.

The Birmingham, Alabama-based oil and gas producer, operating in the US, said the acquisition of the Permian Basin oil and gas producer is valued at about USD1.8 billion, the largest acquisition in Diversified's history.

Diversified said it expects the acquisition, confirmed in August, to increase production by around 35% and adjusted earnings before income, tax, depreciation and amortisation by about 55%. Completion is targeted for the fourth quarter of 2026, subject to customary closing conditions including regulatory approvals.

"This increased scale will materially enhance Diversified’s relevance as a producer and marketer of oil, natural gas, and [natural gas liquids], creating opportunities for the company's in-house marketing organisation to optimise pricing, transportation, market access, and commercial arrangements," the company said.

The acquisition will be primarily funded through a USD1.5 billion asset-backed securitisation arranged by Carlyle, alongside other customary financing sources including available liquidity under Diversified's revolving credit facility.

Diversified also said it has expanded its strategic partnership with Carlyle, from the original USD2 billion framework, allowing the firms to pursue up to USD10 billion of potential producing-asset acquisition opportunities over time.

Birch currently produces around 68,000 barrels of oil equivalent per day, comprising around 38% oil, 32% natural gas liquids and 30% gas. The assets include around 480 net wells and are expected to contribute annualised adjusted Ebitda of about USD548 million.

Diversified said the acquisition will establish a scaled operated position in the Permian Basin and provide a platform for further consolidation of producing assets in the basin.

Rusty Hutson Jr, chair & chief executive officer of Diversified said the transaction will strengthen the company's "position as a significant operator and marketer of oil and natural gas in the US, with ever-expanding commercial opportunities led by our in-house marketing organisation."

Shares in Diversified Energy were 0.2% higher at 1,134.68 pence each on Thursday morning in London.

By Niall Holden, Alliance News reporter

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