(Source: Hart Energy; Shutterstock.com)
Diversified Energy Co. agreed in May to purchase Barnett Shale assets from Blackbeard Operating LLC for $180 million. The transaction comes on the heels of Diversified closing on its acquisition of Indigo Minerals LLC’s Cotton Valley assets in Louisiana.
With both acquisitions, Diversified said on May 21 that it would add 300,000 net acres of leasehold to in the region it’s dubbed the central regional focus area. Combined, the company has spent $315 million gross for 192 million cubic feet equivalent of natural gas per day. The company also counted PDP PV-10 reserves of $413 million.
Blackbeard’s assets will add 123,000 net acres, 16,000 barrels of oil equivalent per day and 840 net wells. Diversified said it expects the assets to generate about $48 million in EBITDA. The deal will wrap up in June, with Diversified paying for the assets with cash on hand and its revolver.
Blackbeard, based in Midland, Texas, holds assets in the Permian and Arkoma basins as well as Ark-La-Tex. The privately held company was formed in 2014 through an equity commitment from Natural Gas Partners. In February, the company marketed assets in the Permian’s Central Basin Platform.
CEO Rusty Hutson Jr. said the transaction meaningfully expands the Diversified’s footprint in the region and affords the company opportunity to build a significant scale while driving down costs as it’s done the Appalachia Basin.
“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,” Hutson said in a news release.
The company’s deal with Indigo, which closed May 19, included 180,000 net acres, production of 16,000 BOE/d and 815 wells. The equity contribution of Blackbeard and Indigo assets will create about $335MM of additional debt capacity to fund future consolidation opportunities, the company said.
Diversified, based in Birmingham, Ala., is traded on the London’s AIM stock exchange. The company’s portfolio includes low-decline gas producing assets in the Appalachian Basin including West Virginia, Kentucky and Tennessee.
Diversified Energy Transactions, Central Regional Focus Area
| Blackbeard (pending) | Indigo Minerals (closed) | |
|---|---|---|
|
Gross Purchase Price ($MM) |
$180 | $135 |
| Net Purchase Price ($MM) | ~$166 (b) | ~$115 |
| Effective Date | 1 April 2021 | 1 March 2021 |
| Expected Closing Date | Late June 2021 | Late May 2021 |
| Adj. EBITDA Purchase Price | ~3.5x | ~2.9x |
| Net Production (BOE/D) | ~16,000 | ~16,000 |
| PDP Reserves (MMBOE) | 79 | ~50 |
| PV10 of Reserves ($MM) | $238 | ~$175 |
(Source: Diversified Energy Co.)
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