Diversified Energy Company PLC Monetizes Haynesville Undeveloped Acreage

Rhea-AI Summary

Diversified Energy Company PLC has announced it will divest its working interest in undeveloped Haynesville acreage in Texas for approximately $72.8 million, netting $37.3 million to the company. This deal includes $33.7 million for 22,729 net acres and $3.6 million for 38 producing wells. The sale reduces the company’s investment in a previous transaction by 30%, lowering it to $81 million. The CEO emphasized the sale enhances liquidity and reflects the company’s strategy to maximize asset value. The transaction is expected to close by late December 2021.

Positive

• Net cash inflow of $37.3 million from the asset sale enhances liquidity.
• Reduces previous investment in Tanos acquisition by 30%, lowering it to $81 million.
• Reflects company’s strategy to monetize undeveloped assets effectively.

Negative

• None.

BIRMINGHAM, AL / ACCESSWIRE / November 12, 2021 / Diversified Energy Company PLC (LSE:DEC) ("Diversified" or the "Company") is pleased to announce that the Company and Oaktree Capital Management, L.P. ("Oaktree") have entered into a Purchase and Sale Agreement to divest their working interest in certain predominantly undeveloped Haynesville acreage in Texas (the "Assets") for estimated total cash consideration at Closing of approximately $72.8 million (net $37.3 million to Diversified).

Net to Diversified, the sale includes nearly $33.7 million for 22,729 net acres of predominantly undeveloped Haynesville Shale leasehold in Harrison, Leon, Panola, Robertson and Rusk counties, and $3.6 million for 38 gross Haynesville Shale wells on this acreage producing approximately 1,700 net Mcf per day as of November, 2021 (representing just 2% of the production that Diversified originally acquired from Tanos Energy Holdings II LLC ["Tanos"] in August 2021). Diversified retains an overriding royalty interest on certain of the undeveloped leasehold in Panola and Rusk Counties along with the development rights to all geologic formations other than the Haynesville Shale in the divested acreage.

Diversified's successful monetizing of these Assets effectively reduces its investment in the previously announced Tanos transaction by 30% to $81 million from the original $118 million^(a), net of purchase price adjustments. Consistent with previous acquisitions, the Company ascribed no value to the undeveloped Haynesville leasehold. Accordingly, 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. Diversified expects to close the transaction in mid to late December subject to the purchaser's normal and customary diligence.

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

"I am proud of our team's actions to enhance the value of our recent Tanos acquisition, significantly reducing our net purchase price by successfully monetizing these Assets. This transaction exemplifies our strategy of efficiently managing our producing assets and extracting maximum value from predominantly undeveloped resources. The sale proceeds enhance our liquidity as we evaluate other value-accretive opportunities. We remain focused on completing the integration our Central Region acquisitions, delivering operational and administrative synergies and implementing our ESG initiatives and Smarter Asset Management program across the portfolio."

Footnotes:

(a)	Excludes certain below-market natural gas hedge contracts through 2023 assumed by Diversified, as previously announced via RNS on 05 July 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 30 June 2021

For further information, please contact:
Diversified Energy Company PLC
Jim Sheehan
+1 205 408 0909
www.div.energy
ir@dgoc.com

Buchanan
Financial Public Relations
Ben Romney
Chris Judd
Jon Krinks
James Husband
+44 20 7466 5000
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/672491/Diversified-Energy-Company-PLCMonetizes-Haynesville-Undeveloped-Acreage

FAQ

What did Diversified Energy Company announce on November 12, 2021?

Diversified Energy Company announced a divestiture of its working interest in undeveloped Haynesville acreage for approximately $72.8 million, netting $37.3 million.

How much will Diversified Energy Company receive from the sale of Haynesville acreage?

Diversified Energy Company is expected to receive $37.3 million from the sale of the Haynesville acreage.

What is the impact of the Haynesville asset sale on Diversified's previous Tanos acquisition?

The sale reduces Diversified's investment in the Tanos acquisition by 30%, bringing it down to $81 million.

When is the transaction for the Haynesville acreage expected to close?

The transaction is expected to close in mid to late December 2021.

What strategic benefit does Diversified Energy Company see from the Haynesville sale?

The sale is seen as a way to enhance liquidity and reflects the company's strategy to effectively manage and monetize its assets.