REG - Diversified Energy - Diversified Acquires Maverick Natural Resources
27/01/2025 07:00
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RNS Number : 7653U Diversified Energy Company PLC 27 January 2025
January 27, 2025
Diversified Expands Asset Base, Density, and Commodity Mix with Acquisition of
Liquids Rich Maverick Natural Resources
Financial and Strategic Accretive Acquisition Provides Opportunity for 95%
Increase in Revenue, Enhanced Margins, Expense Synergies, and 55% Increase in
Free Cash Flow
Unique & Differentiated Business Model Offers Reliable Production,
Multi-Basin Commodity Diversification, and Strong Hedging Program that Enables
Consistent Free Cash Flows
Significant Operating Scale Provides Optionality for Organic Growth Through
Established Low-Risk, High-Return Development Partnership
Expands Proven Roll-Up Model to the Permian Basin and Forges Partnership with
Energy Focused Investor EIG
Modern Field Management Philosophy of Experienced Diversified Team Well
Positioned to Leverage Technology, Capture Synergies and Unlock Portfolio
Value
BIRMINGHAM, AL - January 27, 2025 - Diversified Energy (LSE: DEC; NYSE: DEC),
today announced that it has entered into a definitive agreement to acquire
Maverick Natural Resources, a portfolio company of EIG for total consideration
of approximately $1,275 million. The Acquisition combines two complementary
asset packages, pairing high-quality Proved Developed Producing weighted
production assets with the lowest corporate decline and capital intensity
among peers. The acquisition of Maverick by Diversified adds immediate scale,
increases liquids production, and creates a combined company with long-term
free cash flow generation, superior unit cash margins, and a compelling
sustainability profile.
The Acquisition further executes upon Diversified's strategy for maintaining
the optionality of multiple development opportunities through established
joint venture partnerships across the combined portfolio of vast undeveloped
acreage in multiple high-returning basins. A portion of the acquisition
directly offsets Diversified's core Western Anadarko position with active
development in the Cherokee Play, and provides a new Permian asset base with
multiple zones in the Northern Delaware Basin.
The combined company is expected to generate substantial free cash flow,
delivering strong, consistent shareholder value creation through disciplined
debt reduction, a sustainable fixed dividend, and strategic share repurchases.
The combined company will have an enterprise value of approximately $3.8
billion and operate across five distinct operating regions, with a combined
production base of approximately ~1,200 MMcfe/d (~200 Mboe/d).
OPERATING AND FINANCIAL METRICS
USD Millions unless otherwise noted Diversified Maverick
Current Production (MMcfe/d) ~850 ~350
Commodity Mix ~85% Natural Gas ~15% Liquids ~45% Natural Gas
~55% Liquids
Total Revenue, Inclusive Settled Hedges((a)) ~$940 ~$900
Adjusted EBITDA((b)) ~$555 ~$380
Free Cash Flow((c)) ~$220 ~$125
EV/EBITDA((d)) ~4.5x ~3.3x
Leverage((e)) 2.9x 1.8x
PV-10 of Total Proved Reserves((f)) ~$3.9 Billion ~$2.1 Billion
PV-10 of PDP Only((f)) ~$3.9 Billion ~$1.7 Billion
For the twelve-month period ended September 30, 2024 unless otherwise noted
CEO COMMENTARY
Rusty Hutson, Jr., CEO of Diversified, commented:
"This acquisition expands our unique and highly focused energy production
company with a complementary portfolio of attractive, high-quality assets. We
have a proven track record of unlocking value from acquisitions while
maintaining our commitment to sustainability leadership, and this acquisition
provides us with great assets and employees that complement this strategy. 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.
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. We view commodity, geography, asset,
and business segment diversification as strategic advantages that drive more
resilient and consistent free cash flow and long-term value creation for our
combined company.
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. We plan to
leverage Maverick's experienced technical asset development team to unlock
undeveloped acreage potential through an even larger combined footprint, and I
am confident that Diversified's management team will bring its expertise in
efficiently integrating acquisitions to further expand our Smarter Asset
Management practices.
We have created a strong platform of people and financial resources to build
and operate an organization that continues to be the Right Company at the
Right Time to responsibly produce American energy, deliver reliable free cash
flow, and drive shareholder value."
Rick Gideon, CEO of Maverick Natural Resources:
"Today marks an important milestone for all of us at Maverick Natural
Resources. We have great respect for the innovative approach and stewardship
demonstrated by the team at Diversified and are pleased to enter into this
partnership. Maverick has built a strong foundation of execution and
efficiency across our portfolio, and we look forward to combining our
complementary portfolio of assets with Diversified. I would also like to
express my gratitude to the team at Maverick for their hard work and
dedication in supporting our strategic efforts and contributing to this
achievement."
Jeannie Powers, Managing Director and Head of Domestic Traditional Energy,
EIG:
"We are extremely pleased to have entered into this acquisition and look
forward to contributing as a core shareholder. We aim to work closely with the
Diversified management team and Board to support the Company's focus on
delivering long-term value. Diversified is uniquely positioned in the
upstream space with a differentiated business model and a history of
operational excellence. The combination of Maverick's assets with
Diversified's existing footprint represents a strategic opportunity that we
believe can support value creation for all stakeholders."
COMPELLING STRATEGIC AND FINANCIAL RATIONALE
• Value Maximizing Combination: The Acquisition is expected to be
accretive to key metrics including cash flow, leverage, and valuation
multiples. The assets are being acquired at approximately 3.3 times LTM Adj.
EBITDA((g)). The combined company had approximately $1.8 billion in combined
revenue((g)), and approximately $345 million in combined free cash flow((g)).
The acquisition provides meaningful free cash flow accretion, with combined
adjusted per unit EBITDA margins in excess of 2.00 per Mcfe((g)).
• Strong Financial Position, Liquidity and Capital Markets Access:
Leverage accretive acquisition that integrates additional investment-grade ABS
notes, allowing for a natural deleveraging process. Additional size and
scale enhances the Company's trading liquidity and access to capital markets,
bolstering its ability to efficiently finance its business and pursue bolt-on
accretive acquisitions.
• Multi-Basin Exposure and Scale: Combination enhances position in core
geographies across Appalachia, the Western Anadarko, Permian, Barnett, and
Ark-La-Tex regions, with commodity product diversification, including
beneficial exposure to oil markets, to create a more resilient market cycle
risk profile and more durable revenue. This multi-basin scale also provides
capital investment optionality for organic growth by acquisition or growth by
high returns joint venture partnership development projects.
• Unique Operational Approach: Company focused on responsible
operations and stewardship of existing energy infrastructure assets, including
well optimization and managing the assets by leveraging technology, vertical
integration, and scale to the ultimate end of life. By leveraging the
complementary operations focus, utilizing technology, aligning resources, and
sharing expertise, Diversified is poised to optimize performance, extract
substantial value, and drive growth.
• Commitment to Stewardship and Environmental Performance: Combined
company focus on achieving tangible targets, and dedicated actions to driving
sustainability, transparency, and environmental progress through asset
improvement and optimization practices, data-driven innovation of ongoing
measurement, monitoring, and mitigation of emissions.
• Proven Process to Capture Synergies: Diversified's established
integration playbook and corporate infrastructure are anticipated to unlock
significant and sustainable value with fast, effective and efficient
integration. Familiarity with the asset base and the combined density provides
considerable expense savings and a meaningful earnings contribution.
TRANSACTION DETAILS
The gross Acquisition value of $1,275 million (inclusive of debt assumption)
represents an approximate 3.3 times LTM EBITDA((g)) multiple. Consideration is
expected to be satisfied through the assumption of approximately $700 million
of Maverick debt outstanding associated with its RBL, an ABS amortizing note
and other outstanding credit, the issuance of approximately 21.2 million new
U.S. dollar-denominated Diversified Ordinary Shares to the unitholders of
Maverick valued at approximately $345 million at signing, and approximately
$207 million in cash, with the mix of Ordinary Shares and cash subject to
adjustment based on the outstanding amount of Maverick's RBL at Completion.
The combined company will have an enterprise value of approximately $3.8
billion as of signing. Upon completion, EIG will own approximately 20% of the
outstanding Ordinary Shares, inclusive of the Ordinary Shares currently owned
from previous transactions. The Ordinary Shares will be subject to a customary
lock-up agreement.
The Company has received commitments for $900 million on a new upsized $1.5
billion, four-year credit facility which incorporates both the existing
Diversified RBL and the new RBL assets from Maverick as collateral. The
amended and restated credit facility provides necessary liquidity for the cash
consideration of the acquisition and to refinance Maverick's RBL.
Additionally, the Company intends to undertake potential refinancings related
to other credit products outside of the Company's credit facility.
The Acquisition is subject to a $50 million break fee payable by Diversified
Gas & Oil Corporation in certain circumstances.
LEADERSHIP AND GOVERNANCE
The Company will continue to be led by its proven management team that
reflects the strengths and capabilities of the organization. Upon closing, Mr.
Hutson will continue to serve as Chief Executive Officer and as a member of
the Board. Diversified's current Chair of the Board, David Johnson, will
continue to serve as the Chair of the Company's Board.
Upon completion of the Acquisition, the Company's Board will consist of eight
directors, six of whom are members of the current Diversified Board, including
Mr. Hutson, and two of whom will be designated by EIG.
Due to other commitments, Sylvia Kerrigan has resigned from the Company's
Board of Directors effective as of January 24, 2025. Ms. Kerrigan, who has
been a member of the Board since 2021, is leaving the Board in good standing
and on amicable terms. Upon her departure from the Board, it is expected
that the current Board and Remuneration committee member David Turner has been
appointed chair of the Remuneration Committee and join the Nomination and
Governance Committee effective January 25, 2025. Additionally, Sandy Stash
will be appointed lead independent director effective January 25, 2025.
David Johnson, Non-Executive Chairman of the Board, commented:
"On behalf of our Board and Diversified's management team, we thank Sylvia for
her service to the Company. We have valued and appreciated her insight and
industry expertise. We wish her well in her future endeavors."
BOARD STATEMENT
The Board unanimously considers the Acquisition to be in the best interests of
the shareholders of the Company as a whole. The Board believes the Acquisition
would provide Diversified with significantly increased scale, long-term free
cash generation, superior unit cash margins, low decline production base, a
compelling environmental profile, and a robust regional consolidation
opportunity.
TIMING AND APPROVALS
The Acquisition, which is expected to close during the first half of 2025, has
been unanimously approved by the Board.
Completion is subject to customary closing conditions, including, among
others, regulatory clearance and approval by Diversified shareholders for the
issue and allotment of the Ordinary Shares pursuant to the Agreement.
ADVISORS
Citi is serving as financial and transaction advisor to Diversified. Truist
and Stifel are serving as additional advisors to Diversified. Gibson, Dunn
& Crutcher LLP and Latham & Watkins (London) LLP are serving as legal
advisor to Diversified on the Acquisition. KeyBanc is serving as
Administrative Agent and KeyBanc Capital Markets is the Lead Arranger on
Diversified's debt financing in connection with the Acquisition. Jefferies
Securities is serving as financial advisor and Kirkland & Ellis LLP is
serving as legal advisor to Maverick and EIG.
UK LISTING RULES
The Acquisition, because of its size in relation to Diversified, constitutes a
"significant transaction" for the purposes of the Listing Rules, and is
therefore notifiable in accordance with UKLR 7.3.1R and 7.3.2R. Additional
details as required under the Listing Rules are presented in Appendix 1.
PRESENTATION AND WEBCAST
Diversified will host a conference call and webcast today at 1:30 p.m. GMT
(8:30 a.m. EST) to discuss the Acquisition.
The conference call details are as follows:
U.S. (toll-free) + 1 877 836 0271
U.K. (toll-free) + 44 (0)800 756 3429
Webcast https://www.div.energy/news-events/ir-calendarevents
Replay Information https://ir.div.energy/financial-info
A presentation detailing the acquisition will be posted to the Company's
website before the conference call. The presentation can be found at
https://ir.div.energy/presentations.
a) Total revenue, inclusive of settled hedges, includes the impact of derivatives
settled in cash; for more information, please refer to "Use of Non-IFRS
Measures"
b) Adjusted EBITDA presented for the twelve-month period ended September 30,
2024; Adjusted EBITDA for Maverick excludes certain non-recurring items
primarily relating to restructuring and other transactional costs and is not
adjusted for the divestiture of East Texas assets subsequent to the
measurement period; Adjusted EBITDA for Diversified includes the annualized
effect of acquisitions performed during the measurement period; for more
information, please refer to "Use of Non-IFRS Measures"
c) DEC Enterprise Value / Adjusted EBITDA ("EV/EBITDA") calculated using Pro
Forma Adjusted EBITDA for the twelve-month period ended September 30, 2024 and
enterprise value ("EV") as of January 17, 2025; Maverick EV/EBITDA multiple
based on gross Acquisition value divided by the Acquisition's Adjusted EBITDA
for the twelve-month period ended September 30, 2024
d) Free Cash Flow represents net cash provided by operating activities less
expenditures on natural gas and oil properties and equipment and cash paid for
interest; for more information, please refer to "Use of Non-IFRS Measures"
e) Leverage is measured as Net Debt divided by Adjusted EBITDA; as used herein,
Net Debt represents total debt as recognized on the balance sheet, less cash
and restricted cash at September 30, 2024; for more information, please refer
to "Use of Non-IFRS Measures"
f) PV-10 for Diversified as reported in the Company's Annual Report for the year
ended December 31, 2023 adjusted to reflect the impact of the acquisitions
undertaken during calendar year 2024 ; PV-10 for Maverick calculated using
historical production data, asset-specific type curves and an effective date
of June 1, 2024 using the 10-year NYMEX strip at January 10, 2025 and
excluding assets divested in October of 2024; for more information, please
refer to "Use of Non-IFRS Measures"
g) For the twelve-month period ended September 30, 2024; does not include the
impact of any potential or expected synergies
CONTACTS
Diversified Energy Company PLC +1 973 856 2757
Doug Kris dkris@dgoc.com
Senior Vice President, Investor Relations & Corporate Communications www.div.energy
FTI Consulting dec@fticonsulting.com
U.S. & UK Financial Media Relations
About Diversified
Diversified is a leading publicly traded energy company focused on natural gas
and liquids production, transport, marketing, and well retirement. Through our
unique differentiated strategy, we acquire existing, long-life assets and
invest in them to improve environmental and operational performance until
retiring those assets in a safe and environmentally secure manner. Recognized
by ratings agencies and organizations for our sustainability leadership, this
solutions-oriented, stewardship approach makes Diversified the Right Company
at the Right Time to responsibly produce energy, deliver reliable free cash
flow, and generate shareholder value. For additional information, please visit
Diversified's website at div.energy.
About Maverick
Maverick is a private oil and gas company headquartered in Houston, Texas.
Maverick specializes in the management of mature upstream assets through
application of automation and data-science technology while focusing on
safety, emissions, and environmental responsibility. For additional
information, please visit Maverick's website at www.mavresources.com.
About EIG
EIG is a leading institutional investor in the global energy and
infrastructure sectors with $24.5 billion assets under management as of
September 30, 2024. EIG specializes in private investments in energy and
energy-related infrastructure on a global basis. During its 42-year history,
EIG has committed over $49.3 billion to the energy sector through 415 projects
or companies in 44 countries on six continents. EIG's clients include many of
the leading pension plans, insurance companies, endowments, foundations and
sovereign wealth funds in the U.S., Asia and Europe. EIG is headquartered in
Washington, D.C. with offices in Houston, London, Sydney, Rio de Janeiro, Hong
Kong and Seoul. For additional information, please visit EIG's website at
www.eigpartners.com.
Forward-Looking Statements
This announcement includes forward-looking statements. Forward-looking
statements are sometimes identified by the use of forward-looking terminology
such as "believe", "expects", "targets", "may", "will", "could", "should",
"shall", "risk", "intends", "estimates", "aims", "plans", "predicts",
"continues", "assumes", "projects", "positioned" or "anticipates" or the
negative thereof, other variations thereon or comparable terminology. These
forward-looking statements include all matters that are not historical facts.
They appear in a number of places throughout this announcement and include
statements regarding the intentions, beliefs or current expectations of
management or the Company concerning, among other things, statements regarding
the Acquisition, including its timing, benefits and impact, descriptions of
the combined company and its operations, integration and transition plans,
synergies, opportunities and anticipated future operational and financial
performance, and the results of operations, financial condition, prospects,
growth, strategies and dividend policy of the Company and the industry in
which it operates. These forward-looking statements involve known and unknown
risks and uncertainties, many of which are beyond the Company's control and
all of which are based on management's current beliefs and expectations about
future events, including the expected timing and likelihood of completion of
the Acquisition, including the timing, receipt and terms and conditions of any
required government or regulatory approvals of the Acquisition that could
reduce anticipated benefits or cause the parties to abandon the Acquisition,
the ability to successfully integrate the businesses, the occurrence of any
event, change or other circumstances that could give rise to the termination
of the merger agreement, the possibility that stockholders of Diversified may
not approve the issuance of new shares of common stock in the Acquisition, the
risk that the parties may not be able to satisfy the conditions to the
Acquisition in a timely manner or at all, the risk that any announcements
relating to the Acquisition could have adverse effects on the market price of
Diversified's common stock, the risk that the Acquisition and its announcement
could have an adverse effect on the ability of Diversified and Maverick to
retain customers and retain and hire key personnel and maintain relationships
with their suppliers and customers and on their operating results and
businesses generally, the risk the pending Acquisition could distract
management of both entities and they will incur substantial costs, the risk
that problems may arise in successfully integrating the businesses of the
companies, which may result in the combined company not operating as
effectively and efficiently as expected, the risk that the combined company
may not achieve synergies as expected and other important factors that could
cause actual results to differ materially from those projected.
Use of Non-IFRS Measures and Non- GAAP Measures
Certain key operating metrics that are not defined under IFRS and GAAP
(alternative performance measures) are included in this announcement. These
Non-IFRS and Non-GAAP measures are used by us to monitor the underlying
business performance of the Company from period to period and to facilitate
comparison with our peers. Since not all companies calculate these or other
Non-IFRS and Non-GAAP metrics in the same way, the manner in which we have
chosen to calculate the Non-IFRS and Non-GAAP metrics presented herein may not
be compatible with similarly defined terms used by other companies. The
Non-IFRS and Non-GAAP metrics should not be considered in isolation of, or
viewed as substitutes for, the financial information prepared in accordance
with IFRS and GAAP. Certain of the key operating metrics are based on
information derived from our regularly maintained records and accounting and
operating systems.
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion,
depreciation and amortization. Adjusted EBITDA includes adjusting for items
that are not comparable period-over-period, namely, accretion of asset
retirement obligation, other (income) expense, loss on joint and working
interest owners receivable, (gain) loss on bargain purchases, (gain) loss on
fair value adjustments of unsettled financial instruments, (gain) loss on
natural gas and oil property and equipment, costs associated with
acquisitions, other adjusting costs, non-cash equity compensation, (gain) loss
on foreign currency hedge, net (gain) loss on interest rate swaps and items of
a similar nature. Adjusted EBITDA should not be considered in isolation or as
a substitute for operating profit or loss, net income or loss, or cash flows
provided by operating, investing, and financing activities. However, we
believe such a measure is useful to an investor in evaluating our financial
performance because it (1) is widely used by investors in the natural gas and
oil industry as an indicator of underlying business performance; (2) helps
investors to more meaningfully evaluate and compare the results of our
operations from period to period by removing the often-volatile revenue impact
of changes in the fair value of derivative instruments prior to settlement;
(3) is used in the calculation of a key metric in one of our Credit Facility
financial covenants; and (4) is used by us as a performance measure in
determining executive compensation.
Per-Unit Adjusted EBITDA Margin
As used herein per-unit adjusted EBITDA margin represents the amount of
Adjusted EBITDA per unit of production.
Diversified Energy
The following table presents a reconciliation of the IFRS Financial measure of
Net Income (Loss) to Adjusted EBITDA and per-unit adjusted EBITDA margin for
each of the periods listed:
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Income (loss) available to ordinary shareholders after taxation $194,559 $759,701
Finance costs 134,173 134,166
Accretion of asset retirement obligation 28,639 26,926
Other (income) expense (1,022) (385)
Income tax (benefit) expense 43,806 240,643
Depreciation, depletion and amortization 237,704 224,546
Gain on bargain purchase - -
(Gain) loss on fair value adjustments of unsettled financial instruments (264,130) (905,695)
(Gain) loss on oil and gas programme and equipment((a)) 1,779 20
(Gain) loss on sale of equity interest (18,440) (18,440)
Unrealized (gain) loss on investment (7,043) (4,610)
Impairment of proved properties 41,616 41,616
Costs associated with acquisitions 13,191 16,775
Other adjusting costs((b)) 27,684 17,794
Loss on early retirement of debt 12,284 -
Non-cash equity compensation 8,234 6,494
(Gain) on foreign currency hedge - 521
(Gain) loss on interest rate swap (200) 2,722
Total Adjustments 258,275 (216,907)
Adjusted EBITDA $452,834 $542,794
Pro forma TTM adjusted EBITDA((c)) $555,456 $549,258
Adjusted EBITDA $452,834 $542,794
Total Production (MMcfe) 283,474 299,632
Per-unit adjusted EBITDA margin ($/Mcfe) $1.60 $1.81
(a) Excludes proceeds received for leasehold
sales.
(b) Other adjusting costs for the year ended December 31, 2023 were primarily
associated with legal and professional fees related to the U.S. listing, legal
fees for certain litigation, and expenses associated with unused firm
transportation agreements.
(c) Pro forma TTM adjusted EBITDA includes adjustments for respective twelve
month periods to pro forma results for the full twelve-month impact of
intra-period acquisitions (September 30, 2024: Oaktree, Crescent Pass Energy;
September 30, 2023: Tanos Energy Holdings II LLC; December 31, 2023: Tanos
Energy Holdings II LLC)
Maverick Natural Resources
The following table presents a reconciliation of the GAAP Financial measure of
Net Income (Loss) to Adjusted EBITDA per-unit adjusted EBITDA margin for each
of the periods listed:
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Net Income (Loss) $126,448 $256,281
Loss (gain) on commodity derivative instruments (170,953) (145,934)
Commodity derivative instrument settlement payments 16,020 (46,722)
Depletion, depreciation, and amortization expense 177,793 166,488
Impairment of oil and natural gas properties 114,958 66,785
Interest expense 83,924 62,176
Restructuring costs 8,853 1,631
Gain on sale of assets (2,274) (1,090)
Income tax expense (benefit) 1,168 604
Other income, net (2,968) (1,130)
Transaction, Integration & Other Costs 28,311 29,371
Total Adjustments 254,832 132,179
Adjusted EBITDA $381,280 $388,460
Adjusted EBITDA $381,280 $388,460
Total Production (MMcfe) 129,982 145,517
Per-unit adjusted EBITDA margin ($/Mcfe) $2.93 $2.67
Net Debt and Net Debt-to-Adjusted EBITDA
As used herein, net debt represents total debt as recognized on the balance
sheet less cash and restricted cash. Total debt includes our borrowings under
the Credit Facility and our borrowings under or issuances of, as applicable,
our subsidiaries' securitization facilities, excluding original issuance
discounts and deferred finance costs. We believe net debt is a useful
indicator of our leverage and capital structure.
As used herein, net debt-to-adjusted EBITDA, or "leverage" or "leverage
ratio," is measured as net debt divided by adjusted trailing twelve-month
EBITDA. We believe that this metric is a key measure of our financial
liquidity and flexibility and is used in the calculation of a key metric in
one of our Credit Facility financial covenants.
The following tables presents a reconciliation of the IFRS and GAAP Financial
measure of Total Non-Current
Borrowings to the Non-IFRS and Non-GAAP measure of Net Debt and a calculation
of Net Debt-to-Adjusted EBITDA
and Net Debt-to-Pro Forma Adjusted EBITDA for each of the periods listed:
Diversified Energy
As at
Amounts in 000's September 30, 2024 December 31, 2023
Total non-current borrowings $1,486,997 $1,075,805
Current portion of long-term debt 210,213 200,822
LESS: Cash (9,013) (3,753)
LESS: Restricted cash (49,678) (36,252)
Net Debt 1,638,519 1,236,622
TTM Adjusted EBITDA 452,834 542,794
Pro forma TTM adjusted EBITDA((a)) $555,456 $549,258
Net debt-to-pro forma TTM adjusted EBITDA 2.9x 2.3x
(a) Pro forma TTM adjusted EBITDA includes adjustments for respective twelve
month periods to pro forma results for the full twelve-month impact of
intra-period acquisitions (September 30, 2024: Oaktree, Crescent Pass Energy;
September 30, 2023: Tanos Energy Holdings II LLC; December 31, 2023: Tanos
Energy Holdings II LLC)
Maverick Natural Resources
As at
Amounts in 000's September 30, 2024 December 31, 2023
Total non-current borrowings $657,292 $697,405
Current portion of long-term debt 113,544 110,254
LESS: Cash (40,137) (53,263)
LESS: Restricted cash (36,736) (31,936)
Net Debt 693,963 722,460
TTM Adjusted EBITDA 381,280 388,460
Net debt-to-adjusted EBITDA 1.8x 1.9x
Free Cash Flow
As used herein, free cash flow represents net cash provided by operating
activities less expenditures on natural gas and oil properties and equipment
and cash paid for interest. We believe that free cash flow is a useful
indicator of our ability to generate cash that is available for activities
other than capital expenditures. Diversified's Board of Directors believe that
free cash flow provides investors with an important perspective on the cash
available to service debt obligations, make strategic acquisitions and
investments, and pay dividends.
The following tables presents a reconciliation of the IFRS and GAAP Financial
measure of Net Cash from Operating
Activities to the Non-IFRS and Non-GAAP measure of Free Cash Flow for each of
the periods listed:
Diversified Energy
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Net cash provided by operating activities $385,084 $410,132
LESS: Expenditures on natural gas and oil properties and equipment (49,730) (74,252)
LESS: Cash paid for interest (115,769) (116,784)
Free cash flow $219,585 $219,096
Maverick Natural Resources
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Net cash provided by operating activities $279,005 $308,261
LESS: Expenditures on natural gas and oil properties and equipment (156,102) (286,420)
LESS: Cash paid for interest((a)) n/a n/a
Free cash flow $122,903 $21,841
(a) For the periods presented, Cash Paid for Interest is included within the
calculation of Maverick Natural Resources' Net Cash Provided by Operating
activities
Total Revenue, Inclusive of Settled Hedges and Adjusted EBITDA Margin
As used herein, total revenue, inclusive of settled hedges, includes the
impact of derivatives settled in cash. We believe that total revenue,
inclusive of settled hedges, is a useful because it enables investors to
discern our realized revenue after adjusting for the settlement of derivative
contracts.
The following table presents a reconciliation of the IFRS Financial measure of
Total Revenue to the Non-IFRS measure of Total Revenue, Inclusive of Settled
Hedges and a calculation of Adjusted EBITDA Margin for each of the periods
listed:
Diversified Energy
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Total revenue((a)) $754,878 $868,263
Net gain (loss) on commodity derivative instruments((b)) 183,876 178,064
Total revenue, inclusive of settled hedges 938,754 1,046,327
Adjusted EBITDA $452,834 $542,794
Adjusted EBITDA margin 48% 52%
Adjusted EBITDA Margin, exclusive of Next LVL Energy 49% 53%
(a) Excludes proceeds received for leasehold
sales.
(b) Net gain (loss) on commodity derivative settlements represents cash (paid)
or received on commodity derivative contracts. This excludes settlements on
foreign currency and interest rate derivatives as well as the gain (loss) on
fair value adjustments for unsettled financial instruments for each of the
periods presented.
Maverick Natural Resources
For the Twelve Months Ended
Amounts in 000's September 30, 2024 December 31, 2023
Total revenue $880,107 $977,390
Net gain (loss) on commodity derivative instruments((a)) 16,020 (46,722)
Total revenue, inclusive of settled hedges 896,127 930,668
Adjusted EBITDA $381,280 $388,460
Adjusted EBITDA margin 43% 42%
(a) Net gain (loss) on commodity derivative settlements represents cash (paid)
or received on commodity derivative contracts. This excludes settlements on
foreign currency and interest rate derivatives as well as the gain (loss) on
fair value adjustments for unsettled financial instruments for each of the
periods presented.
PV-10
PV-10 is a non-IFRS financial measure and generally differs from Standardized
Measure, the most directly comparable IFRS measure, because it does not
include the effects of income taxes on future net cash flows. While the
Standardized Measure is free cash dependent on the unique tax situation of
each company, PV-10 is based on a pricing methodology and discount factors
that are consistent for all companies. In this announcement, PV-10 is
calculated using NYMEX pricing. It is not practicable to reconcile PV-10 using
NYMEX pricing to standardized measure in accordance with IFRS at this time.
Investors should be cautioned that neither PV-10 nor the Standardized Measure
represents an estimate of the fair market value of proved reserves.
Important Notices
The information contained in this announcement is inside information as
stipulated under the UK Market Abuse Regulation. Upon publication of this
announcement, this inside information is now considered to be in the public
domain. The information contained in this announcement is for information
purposes only and does not purport to be complete. The information in this
announcement is subject to change.
This announcement is an announcement and not a circular or equivalent document
and prospective investors should not make any investment decision on the basis
of its contents. Nothing in this announcement constitutes an offer of
securities for sale in any jurisdiction.
Stifel, Nicolaus Europe Limited ("Stifel") is authorized and regulated in the
United Kingdom by the FCA. Stifel is acting exclusively as sponsor for the
Company and no one else in connection with the Acquisition and will not regard
any other person as a client in relation to the Acquisition or the contents of
this announcement and will not be responsible to anyone other than the Company
for providing the protections afforded to clients of Stifel nor for providing
advice in relation to or in connection with the contents of this announcement,
the Acquisition or any matter referred to in this announcement.
No person has been authorized to give any information or to make any
representations other than those contained in this announcement and, if given
or made, such information or representations must not be relied on as having
been authorized by the Company. Subject to the Listing Rules and the
Disclosure Guidance and Transparency Rules of the FCA, the issue of this
announcement shall not, in any circumstances, create any implication that
there has been no change in the affairs of the Company since the date of this
announcement or that the information in it is correct as at any subsequent
date.
Completion is subject to the satisfaction of a number of conditions as more
fully described in this announcement. Consequently, there can be no certainty
that completion of the Acquisition will be forthcoming.
The contents of this announcement are not to be construed as legal, business
or tax advice. Each shareholder should consult its own legal adviser,
financial adviser or tax adviser for legal, financial or tax advice
respectively.
Appendix 1
Key Terms of the Acquisition
Agreement
Upon the terms and subject to the conditions in the Agreement, Diversified
will acquire Maverick through a merger of a newly formed subsidiary of DGOC
with and into Maverick, with Maverick surviving the merger as a subsidiary of
DGOC. At Completion, Maverick unitholders will receive $207.1 million in cash
and 21.2 million in Ordinary Shares, subject to adjustment in accordance with
the terms of the Agreement.
Completion of the Acquisition is subject to various customary closing
conditions, including, among other things, (i) requisite approval by DEC
shareholders, (ii) expiration of the waiting period under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) NYSE approval,
(iv) publication of the UK prospectus and (v) the accuracy of each party's
representations and warranties (subject to certain materiality qualifiers) and
compliance by each party with its covenants under the Agreement in all
material respects.
The Agreement contains customary representations, warranties and covenants for
a transaction of this nature. The Agreement also contains customary
pre-closing covenants, including the obligation of each of Diversified and
Maverick to conduct their respective businesses in the ordinary course
consistent with past practice and to refrain from taking certain specified
actions without the consent of the other party.
The Agreement provides that, during the period from the date of the Agreement
until the closing, each of Diversified and Maverick will be subject to certain
restrictions on their ability to solicit or respond to alternative business
combination proposals from third parties, to provide non-public information to
third parties and to engage in discussions with third parties regarding
alternative business combination proposals. Diversified's non-solicitation
covenant is subject to customary exceptions for a public company.
The Agreement contains certain termination rights for Diversified and
Maverick, including: (i) upon mutual written consent; (ii) for either
Diversified or Maverick, if (A) the closing of the Acquisition is not
consummated by June 30, 2025; (B) a final non-appealable order enjoining the
Acquisition is entered into by any governmental entity; or (C) the required
approval of Diversified's shareholders is not obtained, (iii) for Diversified
or Maverick, as applicable, if the other party breaches its covenants,
representations or warranties such that any of the related closing conditions
in the Agreement would not be satisfied, subject to a specified cure period,
(iv) for Maverick, if (A) prior to receipt of the requisite Diversified
shareholder approval, Diversified's board makes a change of recommendation,
does not include its recommendation in the prospectus or publicly proposes to
do the foregoing, or Diversified materially breaches its non-solicitation
obligations or (B) all closing conditions have been satisfied or waived but
Diversified fails to close when required under the Agreement or (v) for
Diversified, at any time prior to the receipt of its shareholder approval in
order to enter into a definitive agreement with respect to a superior
proposal. The termination rights are subject to important qualifications.
The Agreement further provides that, if the Agreement is terminated by (i)
Maverick in the event that (A) the Diversified board changes its
recommendation, (B) Diversified materially breaches its non-solicitation
obligations or (C) Diversified fails to close the Acquisition when required
under the Agreement and all closing conditions have been satisfied or waived,
(ii) Diversified to accept a superior proposal or (iii) Diversified or
Maverick at the occurrence of the outside date under the Agreement at a time
when Diversified requisite shareholder approval has not been obtained and
Maverick would have been permitted to terminate the Agreement due to a change
in recommendation by Diversified's board or Diversified's material breach of
its non-solicitation obligations, DGOC will be required to pay Maverick a
termination fee equal to $50 million (the "Termination Fee").
If prior to Diversified's shareholders meeting, (i) an acquisition proposal
related to Diversified is publicly proposed or otherwise communicated and not
withdrawn at least five business days before such meeting and (ii) the
Agreement is terminated by Maverick due to (A) the occurrence of the outside
date under the Agreement, (B) a material breach of the non-solicitation
obligations of Diversified or (C) the failure to obtain the required approval
of Diversified's shareholders, and within 12 months after such termination, a
definitive agreement is entered into with respect to a qualifying acquisition
proposal or Diversified consummates a qualifying acquisition proposal, then
DGOC would be required to pay Maverick the Termination Fee.
If the Agreement is terminated because of a failure of Diversified's
shareholders to approve the share issuance contemplated by the Agreement, and
a termination fee is not then payable, DGOC will be required to pay to
Maverick up to $9,000,000 as reimbursement for fees and expenses incurred by
Maverick in connection with the Acquisition. In no event will DGOC be required
to pay the Termination Fee on more than one occasion, and if Maverick is
entitled to receive the Termination Fee after it has already received an
expense reimbursement, the Termination Fee will be paid net of the expense
reimbursement received.
Registration Rights Agreement
At Completion, Diversified will enter into a registration rights agreement
with Maverick unitholders receiving at least 1% of the Ordinary Shares
outstanding as of the closing of the Acquisition pursuant to which Diversified
will agree to, on the terms set forth therein, file with the U.S. Securities
and Exchange Commission a registration statement registering for resale of
Ordinary Shares comprising the share consideration issued in the Acquisition
(the "New Shares"). The registration rights agreement provides for a lockup of
six months for 33% of the New Shares held by parties to the registration
rights agreement, nine months for an additional 33% of the New Shares, and one
year for the remaining 34% of New Shares. Other holders of New Shares will
generally not be able to sell the New Shares for six months, under US law.
Relationship Agreement
At Completion, Diversified will enter into a relationship agreement with EIG
pursuant to which, for so long as EIG (together with its affiliates) holds, in
the aggregate (a) no fewer than 20% of the ordinary shares in the Company, EIG
shall be entitled to nominate for appointment two non-executive directors to
the Board, and (b) fewer than 20% but no fewer than 10% of the ordinary shares
in the Company, EIG shall be entitled to nominate for appointment one
non-executive director to the Board.
Maverick Financial Information
The gross assets of Maverick as at 30 September 2024 amounted to $1.9 billion.
For the twelve-month period ended 30 September 2024, revenue and other income
items of Maverick was $1.1 billion and $(3) million, and net income (loss) was
$126 million.
Risk Factors
The Acquisition is subject to a number of risks. The risks and uncertainties
set out below are those which the Directors believe are the material risks
relating to the Acquisition, material new risks to the Group as a result of
the Acquisition or existing material risks to the Group which will be impacted
by the Acquisition. If any, or a combination of, these risks actually
materialize, the business, results of operations, financial condition, cash
flows or prospects of the Enlarged Group could be materially and adversely
affected. The risks and uncertainties described below are not intended to be
exhaustive and are not the only ones that face the Group.
The information given is as at the date of this announcement and, except as
required by the FCA, the London Stock Exchange, the Listing Rules, UK Market
Abuse Regulations and/or any regulatory requirements or applicable law, will
not be updated. Additional risks and uncertainties not currently known to the
Directors or that they currently deem immaterial, may also have an adverse
effect on the business, financial condition, results of operations and
prospects of the Group. If this occurs, the price of the Ordinary Shares may
decline and Shareholders could lose all or part of their investment.
The completion of the Acquisition is subject to the satisfaction (or waiver,
if applicable) of certain conditions; and if the Acquisition does not complete
because any of the conditions are not satisfied (or waived, if applicable),
the Company will not realize the perceived benefits of the Acquisition.
The completion of the Acquisition is subject to the satisfaction of various
customary closing conditions, including, among other things, (i) approval by
DEC shareholders, (ii) expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) NYSE approval,
(iv) publication of the UK prospectus and (v) the accuracy of each party's
representations and warranties (subject to certain materiality qualifiers) and
compliance by each party with its covenants under the Agreement in all
material respects. Failure to satisfy or, where appropriate, obtain waiver of
any of these conditions may result in the proposed Acquisition not being
completed. In addition, satisfying the outstanding conditions may take longer,
and could cost more, than the Company and Maverick expect. Any delay in
completing the proposed Acquisition may adversely affect the Company and the
benefits that the Company expects to achieve if the Acquisition is completed
within the expected timeframe, which could materially and adversely affect the
business, results of operations, financial condition, cash flows or prospects
of the Group.
There can be no assurance that the conditions to the closing of the
Acquisition will be satisfied, waived or fulfilled in a timely fashion or that
the Acquisition will be completed.
The Company's business relationships may be subject to disruption due to
uncertainty associated with the Acquisition.
Parties with which Diversified does business may experience uncertainty
associated with the Acquisition, including with respect to current or future
business relationships with Maverick, Diversified or the combined business.
Diversified's business relationships may be subject to disruption as parties
with which Maverick or Diversified does business may attempt to negotiate
changes in existing business relationships or consider entering into business
relationships with parties other than Maverick, Diversified or the combined
business. These disruptions could have an adverse effect on the businesses,
financial condition, results of operations or prospects of the combined
business, including an adverse effect on Diversified's ability to realize the
anticipated benefits of the Acquisition. The risk, and adverse effect, of such
disruptions could be exacerbated by a delay in completion of the Acquisition
or termination of the Agreement, which could materially and adversely affect
the business, results of operations, financial condition, cash flows or
prospects of the Group.
The Agreement restricts Diversified's ability to pursue alternatives to the
Acquisition.
The Agreement contains provisions that restrict the ability of Diversified to
enter into a business combination with a party other than Maverick. In
addition, DGOC will be required to pay the Termination Fee under certain
circumstances, including to accept a superior proposal.
Failure to complete Acquisition could negatively impact the price of the
Ordinary Shares and the future business and financial results of Diversified.
If the Acquisition is not completed for any reason, the ongoing businesses of
Diversified may be adversely affected, and without realizing any of the
benefits of having completed the Acquisition, Diversified would be subject to
a number of risks, including the following:
• Diversified may experience negative reactions from the financial
markets, including negative impacts on its share price;
• Diversified may experience negative reactions from its customers,
vendors, business partners, regulators and employees;
• Diversified will be required to pay certain costs relating to the
Acquisition, whether or not the Acquisition is completed;
• the Agreement places certain restrictions on the conduct of
Diversified's business prior to completion of the Acquisition, and such
restrictions, the waiver of which is subject to the written consent of
Maverick (such consent not to be unreasonably withheld, conditioned or
delayed), and subject to certain exceptions and qualifications, may delay or
prevent Diversified from taking certain other specified actions, responding
effectively to competitive pressures or industry developments or otherwise
pursuing business opportunities during the pendency of the Acquisition that
Diversified would have made, taken or pursued if these restrictions were not
in place;
• Diversified could be subject to litigation related to any failure
to complete the Acquisition or related to any enforcement proceeding commenced
against Diversified to perform its obligations under the Agreement;
• matters relating to the Acquisition (including integration
planning) will require substantial commitments of time and resources by
Diversified's management, which would otherwise have been devoted to
day-to-day operations and other opportunities that may have been beneficial to
Diversified as an independent company; and
• in the event of a termination of the Agreement under certain
circumstances specified in the Agreement, DGOC may be required to pay a
termination fee of $50 million to Maverick.
There can be no assurance that the risks described above will not materialize.
If any of those risks materialize, they may materially and adversely affect
the business, results of operations, financial condition, cash flows or
prospects of the Group..
The levels of Maverick's natural gas and oil reserves and resources, their
quality and production volumes may be lower than estimated or expected.
The reserves data for Maverick contained in this announcement has not been
audited by a third party. The standards utilized to prepare the reserves
information that has been extracted in this announcement may be different from
the standards of reporting adopted in other jurisdictions. The data found in
the reserves information set forth in this announcement may not be directly
comparable to similar information prepared in accordance with the reserve
reporting standards of other jurisdictions.
In general, estimates of economically recoverable natural gas, natural gas
liquids and oil reserves are based on a number of factors and assumptions made
as of the date on which the reserves estimates were determined, such as
geological, geophysical and engineering estimates (which have inherent
uncertainties), historical production from the properties or analogous
reserves, the assumed effects of regulation by governmental agencies and
estimates of future commodity prices, operating costs, gathering and
transportation costs and production related taxes, all of which may vary
considerably from actual results.
Underground accumulations of hydrocarbons cannot be measured in an exact
manner and estimates thereof are a subjective process aimed at understanding
the statistical probabilities of recovery. Estimates of the quantity of
economically recoverable natural gas and oil reserves, rates of production
and, where applicable, the timing of development expenditures depend upon
several variables and assumptions, including the following:
• production history compared with production from other comparable
producing areas;
• quality and quantity of available data;
• interpretation of the available geological and geophysical data;
• effects of regulations adopted by governmental agencies;
• future percentages of sales;
• future natural gas, natural gas liquids and oil prices;
• capital investments;
• effectiveness of the applied technologies and equipment;
• effectiveness of our field operations employees to extract the
reserves;
• natural events or the negative impacts of natural disasters;
• future operating costs, tax on the extraction of commercial
minerals, development costs and workover and remedial costs; and
• the judgment of the persons preparing the estimate.
As all reserve estimates are subjective, each of the following items may
differ materially from those assumed in estimating reserves:
• the quantities and qualities that are ultimately recovered;
• the timing of the recovery of natural gas and oil reserves;
• the production and operating costs incurred;
• the amount and timing of development expenditures, to the extent
applicable;
• future hydrocarbon sales prices; and
• decommissioning costs and changes to regulatory requirements for
decommissioning.
Many of the factors in respect of which assumptions are made when estimating
reserves are beyond Maverick's and the Company's control and therefore these
estimates may prove to be incorrect over time. Evaluations of reserves
necessarily involve multiple uncertainties. The accuracy of any reserves
evaluation depends on the quality of available information and natural gas,
natural gas liquids and oil engineering and geological interpretation.
Furthermore, less historical well production data is available for
unconventional wells because they have only become technologically viable in
the past twenty years and the long-term production data is not always
sufficient to determine terminal decline rates. In comparison, some
conventional wells in Maverick's portfolio have been productive for a much
longer time. As a result, there is a risk that estimates of the shale reserves
are not as reliable as estimates of the conventional well reserves that have a
longer historical profile to draw on. Interpretation, testing and production
after the date of the estimates may require substantial upward or downward
revisions in the reserves and resources data. Moreover, different reserve
engineers may make different estimates of reserves and cash flows based on the
same available data. Actual production, revenues and expenditures with respect
to reserves will vary from estimates and the variances may be material.
If the assumptions upon which the estimates of Maverick's natural gas and oil
reserves prove to be incorrect or if the actual reserves available to Maverick
are otherwise less than the current estimates or of lesser quality than
expected, the Enlarged Group may be unable to recover and produce the
estimated levels or quality of natural gas, natural gas liquids or oil set out
in this announcement and this may materially and adversely affect the
business, results of operations, financial condition, cash flows or prospects
of the Enlarged Group.
The PV-10 of the Maverick will not necessarily be the same as the current
market value of Maverick's estimated natural gas, natural gas liquids and oil
reserves.
The present value of future net cash flows from the reserves of Maverick is
the current market value of the estimated natural gas, natural gas liquids and
oil reserves of Maverick. The PV-10 of Maverick is the present value of future
cash flows from the reserves of Maverick given a discount rate of 10 per cent.
Actual future net cash flows from Maverick's natural gas and oil properties
will be affected by factors such as:
• actual prices received for natural gas, natural gas liquids and
oil;
• actual cost of development and production expenditures;
• the amount and timing of actual production;
• transportation and processing;
• access to transportation and processing systems and related
tariffs and costs;
• actual costs for decommissioning obligations; and
• changes in governmental regulations or taxation.
The timing of both the production and the incurrence of expenses in connection
with the development and production of the natural gas and oil properties of
Maverick will affect the timing and amount of actual future net cash flows
from reserves, and thus their actual present value. In addition, the 10%
discount factor used when calculating discounted future net cash flows may not
be the most appropriate discount factor based on interest rates in effect from
time to time and risks associated with Maverick or the natural gas and oil
industry in general. Actual future prices and costs may differ materially from
those used in the present value estimate.
The Enlarged Group's success will be dependent upon its ability to fully
integrate Maverick and deliver the value of the combined underlying
businesses; the full financial benefits expected from the Enlarged Group may
not be fully achieved.
The Group and Maverick have operated and, until Completion, will continue to
operate, independently and there can be no assurance that their businesses can
be fully integrated effectively. The success of the Enlarged Group will
depend, in part, on the effectiveness of the integration process and the
ability of the Enlarged Group to realize the anticipated financial benefits
from combining the respective businesses.
While the Directors believe that the financial benefits of the Acquisition and
the costs associated with the Acquisition have been reasonably estimated,
unanticipated events or liabilities may arise or become apparent which may, in
turn, result in a delay or reduction in the benefits anticipated to be derived
from the Acquisition, or in costs significantly in excess of those estimated.
No assurance can be given that the integration process will deliver all or
substantially all of the expected benefits or realize any such benefits within
the assumed timeframe, or that the costs to integrate and achieve the
financial benefits will not be higher than anticipated.
The Acquisition may have a disruptive effect on the Enlarged Group.
The Acquisition has required, and will continue to require, substantial
amounts of investment, time and focus from the management teams and employees
of the Group. Further, the demands that the integration process may have on
management time could result in diversion of the attention of the Group's
management and employees from ongoing operations, pursuing other potential
business opportunities and may cause a delay in other projects currently
contemplated by the Group. To the extent that the Enlarged Group is unable to
efficiently integrate the operations of the Group and Maverick, realize
anticipated financial benefits, retain key personnel and avoid unforeseen
costs or delay, there may be a material adverse effect on the business,
results of operations, financial condition, cash flows or prospects of the
Enlarged Group.
Service contracts of proposed directors
Under the terms of the Relationship Agreement, for so long as EIG (together
with its affiliates) holds, in the aggregate (a) no fewer than 20% of the
ordinary shares in the Company, EIG shall be entitled to nominate for
appointment two non-executive directors to the Board, and (b) fewer than 20%
but no fewer than 10% of the ordinary shares in the Company, EIG shall be
entitled to nominate for appointment one non-executive director to the Board.
It is proposed that such nominated directors shall be appointed by EIG at
Completion, and the nominated directors shall enter into appointment letters
with the Company on terms substantially similar to those entered into by the
existing non-executive directors of the Company
Definitions
The following definitions apply throughout this announcement unless the
context requires otherwise:
"Acquisition" the acquisition of Maverick by the Company pursuant to the Agreement.
"Agreement" the merger agreement dated January 24, 2025 between, among others, the
Company, DGOC and Maverick in connection with the Acquisition
"ABS" asset backed securities
"Board" the board of directors of the Company from time to time.
"Completion" the completion of the Acquisition in accordance with the Agreement.
"Company" Diversified Energy Company PLC
"DGOC" Diversified Gas & Oil Corporation
"Directors" the directors of the Company from time to time.
"EIG" EIG Management Company, LLC.
"Enlarged Group" the Company and its subsidiaries following Completion.
"FCA" the Financial Conduct Authority.
"Group" or "Diversified" the Company and its subsidiaries as at the date of this announcement.
"Listing Rules" the UK Listing rules made by the FCA for the purposes of Part VI of the
Financial Services and Markets Act 2000 (as amended), which came into effect
on 29 July 2024.
"Maverick" Maverick Natural Resources, LLC, a Delaware limited liability company.
"New Shares" the Ordinary Shares constituting the share consideration
"Ordinary Shares" the ordinary shares of £0.20 each in the capital of the Company.
"PDP" Proved developed producing.
"RBL" Reserves based lending
"Relationship Agreement" the agreement proposed to be entered into between the Company and EIG at
Completion, as more fully described in Appendix 1
"UK Market Abuse Regulation" the UK version of Regulation (EU) No 596/2014 of the European Parliament and
of the Council of 16 April 2014 on market abuse, as it forms part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended from time to
time.
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