Diversified Energy has agreed to acquire Birch Permian and some affiliated companies (collectively “Birch”) from Elliott Investment Management for around $1.8bn.
Birch’s assets are based in the Permian Basin and are expected to add a significant operated position of proved developed producing (PDP) oil and gas assets to Diversified’s US onshore portfolio.
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The transaction is expected to close during the fourth quarter of 2026, subject to customary closing conditions and regulatory approvals.
Diversified intends to fund the acquisition primarily through a privately rated asset-backed securitisation of around $1.5bn, in partnership with Carlyle’s Asset-Backed Finance and Capital Markets teams.
Additional funding will come from available liquidity under its revolving credit facility and other standard financing sources. The deal includes a $50m break fee.
With this acquisition, Diversified expects its pro forma operated gross volumes to reach around 2.5 billion cubic feet equivalent per day (bcfe/d), of which around 1.6bcfe/d is net production.
Birch currently produces roughly 68,000 barrels of oil equivalent per day (boepd), with a mix consisting of 38% oil, 32% natural gas liquids (NGLs) and 30% natural gas.
The portfolio includes around 480 net wells, mainly mature and low-decline, with proved reserves of approximately 1.17 trillion cubic feet equivalent and estimated annualised adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $548m.
Integrated infrastructure includes 46,000 net mineral acres of core Permian Basin leasehold, 12 central production facilities, nine gathering facilities and more than 60 miles of gathering pipeline, as well as water disposal and recycling assets.
The company anticipates the acquisition will lead to an estimated 35% rise in production volume and a 55% increase in adjusted EBITDA.
Diversified has also expanded its partnership with Carlyle, allowing both companies to potentially pursue up to $10bn in additional PDP asset acquisitions subject to agreement and approvals.
Diversified chairman and CEO Rusty Hutson said: “I am thrilled to announce the acquisition of Birch, a premier Permian Basin operator that represents an important milestone in Diversified’s evolution and long-term growth strategy. This $1.8bn acquisition is our largest in the company’s 25-year history.
“Birch has assembled one of the highest-quality operated asset positions, combining a concentrated footprint in the core of the Permian, substantial production scale, integrated infrastructure and a track record of delivering predictable, high-margin cash flows.
“These assets align exceptionally well with our disciplined approach to acquiring and optimising long-life energy assets and provide a compelling platform for future value creation for our shareholders.”
The board of Diversified has determined that the transaction is in the best interests of its shareholders.
Birch’s assets are expected to align with Diversified’s strategy of acquiring and operating mature, established production supported by comprehensive infrastructure. The portfolio offers opportunities for optimisation, including enhanced oil recovery at more than 150 permitted locations.
