Diversified Closes Sale of Haynesville Undeveloped Acreage

Rhea-AI Summary

Diversified Energy Company PLC has successfully closed the sale of undeveloped Haynesville acreage in Texas for approximately $67.4 million, netting $34.6 million to the company after adjustments. This divestiture, which represented 2% of its total production from the Tanos Energy acquisition, effectively reduces Diversified's investment in these assets by 29% to $83 million. CEO Rusty Hutson, Jr. stated that the proceeds will enhance financial flexibility and support the evaluation of new opportunities.

Positive

• Generated cash proceeds of approximately $34.6 million, enhancing financial flexibility.
• Reduced investment in undeveloped assets by 29% to $83 million, optimizing capital allocation.
• Strengthening balance sheet by using proceeds to reduce borrowings on the revolving credit facility.

Negative

• The acreage sold represented only 2% of total production, limiting immediate production benefits.
• Despite cash inflow, the divestiture may indicate underlying challenges in developing the Haynesville leasehold.

BIRMINGHAM, AL / ACCESSWIRE / December 29, 2021 / Diversified Energy Company PLC (LSE:DEC) ("Diversified" or the "Company") is pleased to announce the closing of its sale of certain predominantly undeveloped Haynesville acreage in Texas as first announced on November 12, 2021. Diversified and Oaktree Capital Management, L.P. ("Oaktree") divested their working interests in the acreage for a total cash consideration of approximately $67.4 million (net $34.6 million to Diversified) after closing price adjustments. A second closing under the transaction of up to approximately $4 million (net $2 million to Diversified) may be conducted at a date in the near future.

The sale of acreage represented approximately 1,700 net Mcf per day of production as of November, 2021, or just 2% of the production that Diversified originally acquired as part of the Tanos Energy Holdings III LLC ("Tanos") deal in August 2021. Consistent with previous acquisitions, Diversified ascribed no value to the undeveloped Haynesville leasehold though this divestiture effectively reduces the Company's investment in the Assets Diversified acquired from Tanos by 29% to $83 million from the original $118 million(^a), net of purchase price adjustments. The Company's sale of the Assets reflects its proven ability to purchase predominantly PDP (proved, developed, producing) assets at low multiples and drive further value through the strategic monetization of undeveloped upside potential and non-strategic assets.

Rusty Hutson, Jr., CEO of the Company, commented:

"Monetizing a portion of the undeveloped Haynesville acreage we acquired in the Tanos transaction marks a strong finish to an exceptional year for Diversified and boosts our returns from that acquisition by reducing our purchase price by nearly 30%. Using the nearly $35 million of proceeds to reduce the borrowings on our revolving credit facility enhances our financial flexibility as we evaluate other value-accretive opportunities. We enter 2022 with momentum as we integrate our Central Region assets, progress our comprehensive ESG initiatives and remain ever focused on opportunities to expand our portfolio of producing assets."

Footnotes:

(a)	Excludes certain below-market natural gas hedge contracts through 2023 assumed by Diversified, as previously announced via RNS on July 05, 2021

For Company-specific items, refer also to the Glossary of Terms and/or Alternative Performance Measures found in the Company's 2020 Annual Report and Interim Results for the Six Months Ended June 30, 2021

For further information, please contact:

Diversified Energy Company PLC	+1 205 408 0909
Jim Sheehan
www.div.energy
ir@dgoc.com
Buchanan	+44 20 7466 5000
Financial Public Relations
Ben Romney
Chris Judd
Jon Krinks
James Husband
dec@buchanan.uk.com

About Diversified Energy Company PLC
Diversified Energy Company PLC is an independent energy company engaged in the production, marketing and transportation of primarily natural gas related to its synergistic US onshore upstream and midstream assets.

SOURCE: Diversified Energy Company PLC

View source version on accesswire.com:
https://www.accesswire.com/679957/Diversified-Closes-Sale-of-Haynesville-Undeveloped-Acreage

FAQ

What was the total cash consideration from the sale of Haynesville acreage by DECPF?

The total cash consideration was approximately $67.4 million.

How much did Diversified Energy Company net from the sale of undeveloped acreage?

Diversified Energy Company netted approximately $34.6 million after closing price adjustments.

What percentage of production was represented by the sold Haynesville acreage?

The sold acreage represented about 2% of the total production from the Tanos Energy acquisition.

How did the sale affect Diversified Energy Company's investment in the Haynesville assets?

The sale reduced Diversified's investment in the Haynesville assets by 29%, from $118 million to $83 million.

What are the future monetary implications of the sale for DECPF?

The proceeds from the sale will be used to reduce borrowings on the revolving credit facility, enhancing financial flexibility.