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May 31, 2021

Diversified Energy to purchase Blackbeard assets in US

The acquisition is part of the firm’s plans to extend its presence in the Central Regional Focus Area.

By Archana Rani

Diversified Energy Company has agreed to acquire certain upstream assets from Blackbeard Operating, for a gross purchase price of $180m.

The conditional agreement will see Diversified Energy buying Blackbeard’s certain upstream assets in the natural gas Barnett Shale play.

It is expected to add around 475 billion of cubic feet equivalent (Bcfe) of proved developed producing (PDP) reserves and about 96 million cubic feet equivalent per day (MMcfepd) of net production.

The transaction is planned to be completed during June 2021. London LSE-listed Diversified Energy will utilise cash reserves and a draw on its revolving credit facility to complete the deal.

In addition to representing an entry point into the Barnett Shale, the Blackbeard deal would extend Diversified Energy’s presence in its newly identified Central Regional Focus Area (Central RFA).

The deal is the company’s second acquisition of assets in Central RFA.

It follows the purchase of certain Cotton Valley upstream assets located in the Central RFA from Indigo Minerals by Diversified Energy, for nearly $115m ($135m gross).

With the two acquisitions, Diversified Energy is expected to have over 300,000 net acres of leasehold generating around 192 MMcfepd of net production in Central RFA.

The Central RFA, which has ‘significant similarities’ with the Appalachian Basin, offers a mature operating environment. It also provides significant gas production from low-cost, low-decline well stock.

In a press statement, Diversified Energy said: “Establishing a new operating basin complements the Company’s commitment to continue its acquisition strategy in Appalachia while expanding the landscape of significant growth opportunities for Diversified to replicate its successful strategy.”

Diversified Energy CEO Rusty Hutson Jr. said: “These acquisitions serve as a solid springboard to a large opportunity set of accretive, long-life producing assets which will contribute to strong shareholder returns and drive additional debt reductions.”

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