Zinger Key Points
- Diversified Energy to acquire Maverick Natural Resources for $1.275B, expanding its portfolio with high-quality assets.
- Deal to close in 1H 2025, expected to strengthen cash flow, reduce debt and enhance long-term value creation.
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Diversified Energy Company plc DEC shares are trading higher premarket on Monday. The company plans to acquire Maverick Natural Resources, an EIG portfolio company, for around $1.275 billion.
Transaction Details: Diversified will assume around $700 million of Maverick’s debt, issue 21.2 million new Ordinary Shares valued at $345 million and pay approximately $207 million in cash, with the share-to-cash mix adjustable based on Maverick's RBL balance at closing.
Diversified has secured $900 million in commitments for an upsized $1.5 billion, four-year credit facility, consolidating its existing RBL and Maverick's RBL assets.
The facility will cover the cash portion of the acquisition and refinance Maverick's RBL with additional refinancing planned outside the facility.
The deal includes a $50 million break fee payable by Diversified Gas & Oil Corporation under certain conditions.
The deal, which the board unanimously approved, is expected to close in the first half of 2025.
Combined Company & Synergies: The combined company will have an enterprise value of $3.8 billion, with EIG holding about 20% of the outstanding shares, subject to a customary lock-up.
The combined company will operate across five regions and produce ~1,200 MMcfe/d (~200 Mboe/d).
The acquisition is expected to be accretive to cash flow, leverage and valuation multiples, with assets acquired at ~3.3x LTM Adj. EBITDA.
The combined company reported ~$1.8 billion in revenue and ~$345 million in free cash flow. It also enhances per-unit profitability, with adjusted EBITDA margins exceeding $2.00 per Mcfe.
The combined company is expected to have a strong free cash flow, support debt reduction, a sustainable dividend, and share repurchases.
The acquisition also improves unit cash margins and supports a strong sustainability profile.
The acquisition aligns with Diversified Energy's strategy of maintaining development flexibility through joint ventures across its expanded portfolio of high-return basins.
The deal will strengthen Diversified's core Western Anadarko position, adding a new Permian asset base and enhancing production in the Cherokee Play.
”The acquired producing assets have demonstrated leading well performance and are a natural fit with our operating advantage and existing acreage. Notably, the combined footprint in Oklahoma and the Western Anadarko Basin creates one of the largest in terms of production and acreage, which includes the emerging Cherokee formation,” said Rusty Hutson, Jr., CEO of Diversified.
”Diversified shareholders will share in the significant upside potential of the combined company, with its cash flow projected to provide durable and consistent returns and enabling significant debt reduction, further enhancing our long-term value creation proposition,” he continued.
”Diversified anticipates benefiting from the additional capital investment optionality for organic cash flow generation from joint venture partnerships that continue to optimize our combined high-quality asset base.”
Price Action: DEC shares are up 3.17% at $16.27 premarket at the last check Monday.
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