Diversified Closes Summit Natural Resources Acquisition and Tenth Asset Backed Securitization Issuance
Diversified Energy Company (LSE/NYSE:DEC) has completed two significant transactions: the acquisition of Summit Natural Resources assets and its tenth Asset Backed Securitization (ABS X). The Summit acquisition, valued at ~$42 million, includes natural gas properties and midstream infrastructure across Virginia, West Virginia, and Alabama, delivering ~12 MMcfepd current net production and 65 Bcfe in PDP reserves.
The $530 million ABS X note refinancing achieved record demand (6.5x oversubscribed) and features a master trust structure with investment-grade rated notes carrying a ~6.4% blended fixed coupon in A tranche. Strategic hedges are expected to boost EBITDA by ~40% ($38 million) for refinanced assets. The acquisition assets feature Coal Mine Methane volumes with potential for expanded production and environmental credits, while benefiting from premium Transco Zone 5 pricing exposure.
Diversified Energy Company (LSE/NYSE:DEC) ha completato due transazioni significative: l'acquisizione degli asset di Summit Natural Resources e la sua decima Securitizzazione Garantita da Attività (ABS X). L'acquisizione di Summit, valutata circa 42 milioni di dollari, include proprietà di gas naturale e infrastrutture midstream in Virginia, West Virginia e Alabama, con una produzione netta attuale di circa 12 MMcfepd e 65 Bcfe in riserve PDP.
Il prestito ABS X da 530 milioni di dollari ha raggiunto una domanda record (6,5 volte sovrascritto) e presenta una struttura di master trust con note di rating investment-grade che offrono un coupon fisso misto di circa il 6,4% nella tranche A. Si prevede che le coperture strategiche aumenteranno l'EBITDA di circa il 40% (38 milioni di dollari) per gli asset rifinanziati. Gli asset acquisiti presentano volumi di metano da miniere di carbone con potenziale per una produzione ampliata e crediti ambientali, beneficiando al contempo dell'esposizione ai prezzi premium della Transco Zone 5.
Diversified Energy Company (LSE/NYSE:DEC) ha completado dos transacciones significativas: la adquisición de los activos de Summit Natural Resources y su décima Securitización Respaldada por Activos (ABS X). La adquisición de Summit, valorada en aproximadamente 42 millones de dólares, incluye propiedades de gas natural e infraestructura midstream en Virginia, Virginia Occidental y Alabama, con una producción neta actual de aproximadamente 12 MMcfepd y 65 Bcfe en reservas PDP.
El bono ABS X de 530 millones de dólares logró una demanda récord (6.5 veces suscrito) y presenta una estructura de fideicomiso maestro con notas calificadas como grado de inversión que llevan un cupón fijo mixto de aproximadamente 6.4% en la tranche A. Se espera que las coberturas estratégicas aumenten el EBITDA en aproximadamente un 40% (38 millones de dólares) para los activos refinanciados. Los activos adquiridos cuentan con volúmenes de metano de minas de carbón con potencial para una producción ampliada y créditos ambientales, beneficiándose al mismo tiempo de la exposición a los precios premium de Transco Zone 5.
다양화된 에너지 회사 (LSE/NYSE:DEC)가 두 가지 주요 거래를 완료했습니다: Summit Natural Resources 자산 인수 및 열 번째 자산 담보 증권(ABS X). 약 4200만 달러에 평가되는 Summit 인수는 버지니아, 웨스트버지니아 및 앨라배마 전역의 천연가스 자산 및 중간 인프라를 포함하며, 현재 약 12 MMcfepd의 순 생산량과 65 Bcfe의 PDP 매장량을 제공합니다.
5억 3천만 달러 규모의 ABS X 채권 재융자는 기록적인 수요(6.5배 초과 구독)를 달성했으며, 투자 등급으로 평가된 채권을 보유한 마스터 신탁 구조를 특징으로 하며 A 트랜치에서 약 6.4%의 혼합 고정 쿠폰을 제공합니다. 전략적 헤지가 재융자된 자산의 EBITDA를 약 40%(3천8백만 달러) 증가시킬 것으로 예상됩니다. 인수 자산은 확대 생산 가능성과 환경 크레딧을 가진 석탄 광산 메탄량을 특징으로 하며, 프리미엄 Transco Zone 5 가격 노출의 혜택을 보고 있습니다.
Diversified Energy Company (LSE/NYSE:DEC) a finalisé deux transactions importantes : l'acquisition des actifs de Summit Natural Resources et sa dixième Securitisation Adossée à des Actifs (ABS X). L'acquisition de Summit, évaluée à environ 42 millions de dollars, comprend des propriétés de gaz naturel et des infrastructures midstream en Virginie, en Virginie-Occidentale et en Alabama, avec une production nette actuelle d'environ 12 MMcfepd et 65 Bcfe en réserves PDP.
La note ABS X de 530 millions de dollars a atteint une demande record (6,5 fois sursouscrite) et présente une structure de fiducie maîtresse avec des notes notées investissement de qualité, portant un coupon fixe mixte d'environ 6,4 % dans la tranche A. Des couvertures stratégiques devraient augmenter l'EBITDA d'environ 40 % (38 millions de dollars) pour les actifs refinancés. Les actifs acquis présentent des volumes de méthane de mines de charbon avec un potentiel de production accrue et des crédits environnementaux, tout en bénéficiant d'une exposition aux prix premium de la Transco Zone 5.
Diversified Energy Company (LSE/NYSE:DEC) hat zwei bedeutende Transaktionen abgeschlossen: den Erwerb der Vermögenswerte von Summit Natural Resources und die zehnte Asset-Backed Securitization (ABS X). Der Summit-Erwerb, der auf etwa 42 Millionen Dollar geschätzt wird, umfasst Erdgasvorkommen und Midstream-Infrastruktur in Virginia, West Virginia und Alabama, mit einer aktuellen Nettoproduktion von etwa 12 MMcfepd und 65 Bcfe an PDP-Reserven.
Die ABS X-Anleihe über 530 Millionen Dollar hat eine Rekordnachfrage erzielt (6,5-fach überzeichnet) und weist eine Master-Trust-Struktur mit Anleihen in Investment-Grade-Rating auf, die einen etwa 6,4% gemischten festen Kupon in der A-Tranche tragen. Strategische Absicherungen sollen das EBITDA für refinanzierte Vermögenswerte um etwa 40% (38 Millionen Dollar) steigern. Die Erwerbsvermögen weisen Mengen von Methan aus Kohlebergwerken auf, mit Potenzial für eine erweiterte Produktion und Umweltgutschriften, während sie von der Premium-Preiseinschätzung der Transco Zone 5 profitieren.
- Acquisition adds 12 MMcfepd production and 65 Bcfe reserves
- Strategic hedges boost EBITDA by 40% ($38 million)
- ABS X note 6.5x oversubscribed with favorable 6.4% coupon
- Assets benefit from premium Transco Zone 5 pricing
- Additional revenue potential from Coal Mine Methane credits
- Purchase price represents ~PV-16 valuation
Insights
Diversified Energy Company has completed two strategic transactions that significantly enhance its financial position and operational capabilities in the Appalachian Basin. The company has finalized its $42 million acquisition of Summit Natural Resources assets while simultaneously closing an innovative $530 million asset-backed securitization.
The acquisition represents exceptional value, priced at approximately PV-16 versus the assets' PV-10 valuation of
Strategically, three elements of this acquisition stand out:
- Enhanced Coal Mine Methane (CMM) capabilities that generate premium-priced environmental credits, diversifying revenue beyond commodity sales
- Strategic midstream infrastructure providing greater control over the value chain and transportation costs
- Improved price realizations through access to premium Transco Zone 5 markets, which typically command higher pricing than other Appalachian pricing hubs
The concurrent ABS X transaction represents a significant financial engineering achievement. By implementing a master trust structure – the first of its kind for DEC – the company gains flexibility for future securitizations while consolidating three previous debt instruments. The transaction was 6.5x oversubscribed with participation from 20 investors, demonstrating exceptional market confidence in DEC's asset quality and management.
The improved hedging strategy associated with this refinancing is projected to add
These complementary transactions strengthen DEC's position as the leading issuer of oil and gas securitizations while expanding its environmental credit business – a high-margin growth area as markets increasingly value methane emission reductions.
Diversified Energy's dual transaction announcement reveals a sophisticated strategy to enhance both operational capabilities and financial structure through complementary moves in asset acquisition and capital management.
The
- Reduced reliance on third-party gatherers and processors
- Enhanced ability to direct gas flows to premium-priced markets
- Improved operational flexibility during maintenance periods or price dislocations
- Potential to generate third-party transportation revenue
The Coal Mine Methane (CMM) component represents a high-value environmental opportunity. CMM projects capture methane that would otherwise vent to atmosphere from coal operations, transforming a potent greenhouse gas emission into a revenue stream. These projects typically qualify for premium environmental credits beyond the commodity value of the gas itself, with potential values of
The transaction's economics appear particularly favorable with assets purchased at PV-16 versus their PV-10 value of
The
The
Bolt-on Acquisition Increases Coal Mine Methane Environmental Credit Cash Flow, Expands Midstream Infrastructure, and Enhances Southern Appalachia Prices
Strategic Refinance Incorporates
Solidifies Diversified as the Leading Issuer of Oil & Gas Securitizations
BIRMINGHAM, Ala., Feb. 27, 2025 (GLOBE NEWSWIRE) -- Diversified Energy Company PLC (LSE:DEC; NYSE:DEC) (“Diversified” or the “Company”) announces the close of its previously announced acquisition of operated natural gas properties and related midstream pipeline infrastructure located within Virginia, West Virginia, and Alabama (the “Assets”) from Summit Natural Resources (the “Seller”) (together with the assets, the “Acquisition”).
Additionally, the Company closed on an asset backed securitization (“ABS”) refinancing, creating the ABS X note. Diversified will use the proceeds from the ABS transaction to consolidate and repay the outstanding principal of the previously issued ABS I, ABS II and Term Loan I, utilizing those assets plus additional Summit Natural Resources assets as collateral in the new structure. The ABS transaction will also benefit from an improved hedging profile, creating enhanced margins and cash flows. Additional proceeds from this refinancing will be used to reduce outstanding borrowings and for general corporate purposes.
Acquisition Highlights
- Acquisition net purchase price of ~
$42 million - Current net production of ~12 MMcfepd (2 Mboepd)(a)
- PDP Reserves of 65 Bcfe (11 MMBoe) with PV-10 of ~
$55 million (b)- Purchase price equivalent of ~PV-16(b)
- Estimated 2025 Adjusted EBITDA of ~
$12 million (b)(c) - Existing Coal Mine Methane (“CMM”) volumes with opportunities to extend future production and additional environmental credits
- Appalachian assets overlap existing operations providing synergies for increased cash margins
- Strategic midstream pipeline assets facilitate capability to enhance commodity realizations
- Recent improvements to commodity prices have further-enhanced the transaction economics
ABS Issuance Highlights
$530 million ABS X note structured as a master trust- Strategic hedges expected to add ~
40% ($38 million ) to EBITDA(c) of refinanced assets - Significantly oversubscribed (6.5x) with orders from 20 unique investors, reflecting the cash flow quality of our assets and Diversified’s reputation as a responsible issuer
- Investment grade rated notes with blended fixed coupon of approximately
6.4% in A tranche - Improved amortization expected to generate increased cash flows
Sustainability-Linked
Sustainable Fitch has again-provided a Second Party Opinion that the instrument's Key Performance Indicators (the "KPIs") align with the International Capital Markets Association (ICMA) framework for sustainability-linked bond principles, highlighting Diversified's commitment to aligning its financing with the Company's overall sustainability strategy.
*ratings established by Fitch Ratings,Inc.
Commenting on the Acquisition and ABS transaction, CEO Rusty Hutson, Jr. said:
“We are excited to announce the completion of another acquisition of high-quality, bolt-on assets that are uniquely positioned to benefit from the operational expertise of our field teams, capture higher prices with exposure to premium Transco Zone 5 pricing, and are poised to provide additional revenues from the sale of incremental environmental credits with our growth in the production of coal mine methane. We continue to believe there is a sizeable backlog of organic Coal Mine Methane cash flow growth within our current Appalachian portfolio, and this acquisition highlights our ability to leverage existing capabilities, assets, and intellectual capital to grow this segment of our revenue stream.
Brad Gray, CFO further commented:
Supported by a growing base of loyal credit investors, we are now a seasoned programmatic issuer, and this ABS transaction achieved record demand with a significant amount of interest from a large group of new participants. This strategic refinance improves asset level cash flow with higher hedge prices and a more refined amortization schedule. Our increasing operational scale, track record of stable asset performance, and strength of our business enable us to attract reliable sources of capital and achieve a lower overall cost of capital. This outcome is a testament to how the financial markets value Diversified’s reliable production and consistent cash flows.”
On the Securitization: Barclays Capital, Inc. acted as Sole Structuring Advisor and Placement Agent, Mizuho Securities USA LLC, KeyBanc Capital Markets Inc., and Legado Capital Advisors, LLC acted as Co-Placement Agents.
Detring Energy Advisors acted as the sell side advisor to Summit Natural Resources.
Footnotes:
| (a) | Current production based on estimated average daily production for January 2025; Estimate based on historical performance and engineered type curves for the Assets. | |
| (b) | Based on engineering reserves assumptions using historical cost assumptions and NYMEX strip as of October 28, 2024 for the twelve months ended December 31, 2025. | |
| (c) | Adjusted EBITDA is a Non-IFRS measure. As presented for the ABS transaction, represents the twelve months ended February 28, 2026. for more information, see “Use of Non-IFRS Measures”. | |
For Company-specific items, refer also to the Glossary of Terms and/or Alternative Performance Measures found in the Company’s 2024 Interim Report dated June 30, 2024 and Form 20-F for the year ended December 31, 2023 filed with the United States Securities and Exchange Commission.
For further information, please contact:
| Diversified Energy Company PLC | +1 973 856 2757 |
| Doug Kris | dkris@dgoc.com |
| Senior Vice President, Investor Relations & Corporate Communications | www.div.energy |
| FTI Consulting | dec@fticonsulting.com |
| U.S. & UK Financial Public Relations | |
About Diversified Energy Company PLC
Diversified is a leading publicly traded energy company focused on natural gas and liquids production, transport, marketing, and well retirement. Through our unique and differentiated strategy, we acquire existing, long-life assets and invest in them to improve environmental and operational performance until retiring those assets in a safe and environmentally secure manner. Recognized by ratings agencies and organizations for our sustainability leadership, this solutions-oriented, stewardship approach makes Diversified the Right Company at the Right Time to responsibly produce energy, deliver reliable free cash flow, and generate shareholder value.
Forward-Looking Statements
This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995). These forward-looking statements, which contain the words "anticipate", "believe", "intend", "estimate", "expect", "may", "will", "seek", "continue", "aim", "target", "projected", "plan", "goal", "achieve", “opportunity” and words of similar meaning, reflect the Company's beliefs and expectations and are based on numerous assumptions regarding the Company's present and future business strategies and the environment the Company will operate in and are subject to risks and uncertainties that may cause actual results to differ materially. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Expected benefits of the Acquisition and the ABS transaction, including the impact of the Acquisition and the ABS transaction on the company’s cash flows and cash margins, and the Company’s production of coal mine methane, may not be realized. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, including the risk factors described in the "Risk Factors" section in the Company's Annual Report and Form 20-F for the year ended December 31, 2023 and the risk factors described in Exhibit 99.2 to the Company’s Form 6-K furnished with the SEC on January 27, 2025, in each case filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of their date and neither the Company nor any of its directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law. As a result, you are cautioned not to place undue reliance on such forward-looking statements.
Use of Non-IFRS Measures
Certain key operating metrics that are not defined under IFRS (alternative performance measures) are included in this announcement. These non-IFRS measures are used by us to monitor the underlying business performance of the Company from period to period and to facilitate comparison with our peers. Since not all companies calculate these or other non-IFRS metrics in the same way, the manner in which we have chosen to calculate the non-IFRS metrics presented herein may not be compatible with similarly defined terms used by other companies. The non-IFRS metrics should not be considered in isolation of, or viewed as substitutes for, the financial information prepared in accordance with IFRS. Certain of the key operating metrics are based on information derived from our regularly maintained records and accounting and operating systems.
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion, depreciation and amortization. Adjusted EBITDA includes adjusting for items that are not comparable period-over-period, namely, accretion of asset retirement obligation, other (income) expense, loss on joint and working interest owners receivable, (gain) loss on bargain purchases, (gain) loss on fair value adjustments of unsettled financial instruments, (gain) loss on natural gas and oil property and equipment, costs associated with acquisitions, other adjusting costs, non-cash equity compensation, (gain) loss on foreign currency hedge, net (gain) loss on interest rate swaps and items of a similar nature.
EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating profit or loss, net income or loss, or cash flows provided by operating, investing, and financing activities. However, we believe such measures are is useful to an investor in evaluating our financial performance because they (1) are widely used by investors in the natural gas and oil industry as an indicator of underlying business performance; (2) help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement; (3) with respect to Adjusted EBITDA, is used in the calculation of a key metric in one of our Credit Facility financial covenants; and (4) are used by us as a performance measure in determining executive compensation. We are unable to provide a quantitative reconciliation of forward-looking EBITDA and Adjusted EBITDA to the most directly comparable forward-looking IFRS measures because the items necessary to estimate such forward-looking IFRS measures are not accessible or estimable at this time without unreasonable efforts. The reconciling items in future periods could be significant.
PV-10
PV-10 is a non-IFRS financial measure and generally differs from Standardized Measure, the most directly comparable IFRS measure, because it does not include the effects of income taxes on future net cash flows. While the Standardized Measure is free cash dependent on the unique tax situation of each company, PV-10 is based on a pricing methodology and discount factors that are consistent for all companies. In this announcement, PV-10 is calculated using NYMEX pricing. It is not practicable to reconcile PV-10 using NYMEX pricing to standardized measure in accordance with IFRS at this time. Investors should be cautioned that neither PV-10 nor the Standardized Measure represents an estimate of the fair market value of proved reserves.
FAQ
What is the value and production capacity of DEC's Summit Natural Resources acquisition?
How much is DEC's new ABS X note worth and what is its oversubscription rate?
What is the expected EBITDA impact from DEC's strategic hedges in the ABS refinancing?
What is the estimated 2025 Adjusted EBITDA for DEC's Summit acquisition?
