REG - Diversified Energy - Diversified Completes Crescent Pass Acquisition

Diversified EnergyAnnouncement

16/08/2024 07:15

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RNS Number : 6774A  Diversified Energy Company PLC  16 August 2024

August 16, 2024

 

 Diversified Energy Company PLC

("Diversified" or the "Company")

Diversified Energy Completes Crescent Pass Acquisition

Diversified Energy Company PLC (LSE: DEC, NYSE:DEC) ("Diversified" or the
"Company") announces the closing of its acquisition of the of high-working
interest, operated natural gas properties and related facilities located
within eastern Texas (the "Assets") from Crescent Pass Energy (the "Seller")
(the "Acquisition").

Acquisition Highlights

•     Purchase price of $106 million before customary purchase price
adjustments

•     Acquisition net purchase price of $101 million after customary
purchase price adjustments

▪     PDP reserves of ~170 Bcfe ((~)28 MMBoe) and a PDP PV10 of (~)$155
million((a))

▪     Current net production of 38 MMcfepd ((~)6 Mboepd)((b))

•     Estimated NTM Adjusted EBITDA of (~)$26 million((c))

•     Purchase price multiple of (~)3.8x((c))

As previously announced, the net consideration for the Acquisition consists of
a combination of the issuance of 2,249,650 new US-dollar denominated ordinary
shares to the Seller (the "New Shares") (subject to a customary commercial
lock-up agreement), and cash consideration of $71 million, drawing from a
senior secured bank facility supported by the acquired assets and existing
liquidity. The New shares represents approximately 4.77% of the Company's
existing issued share capital.

CEO Rusty Hutson, Jr. commented:

"We are excited to announce the completion of another attractively-priced
acquisition of Central Region assets which stands to benefit Diversified as a
result of our continued growth in scale and density throughout the asset
footprint. We are excited to on board our new employees from Crescent Pass and
begin the process of efficient integration and deployment of Smarter Asset
Management along with our sustainability initiatives across these assets,
while adding robust cash flows that further support our business."

Admission of Shares and Total Issued Share Capital

The Company has applied for the New Shares to be admitted to the Equity Shares
(Commercial Companies) Category of the Official List of the Financial Conduct
Authority and to trading on the main market of the London Stock Exchange PLC,
and expects admission to occur on or around 19 August 2024. The New Shares
will rank pari passu in all respects with the Company's existing ordinary
shares of 20 pence each ("Ordinary Shares").

Following the allotment and issue of the New Shares, the Company will have
49,438,579 Ordinary Shares in issue and holds no Ordinary Shares are held in
treasury. Shareholders may use the figure of 49,438,579 as the denominator in
calculations to determine if they are required to notify the Company of their
interest in, or a change to their interest in the Company under the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules.

Footnotes:

 (a)  PDP reserves values (including volumes, PV-10 and approximate PV value)

    calculated using historical production data, asset-specific type curves and an
      effective date of May 1, 2024 and based on the 4-year NYMEX strip at June 18,
      2024 with terminal price assumptions of $3.94/MMBtu and $68.06/Bbl for natural
      gas and oil, respectively. For more information, please refer to "Use of
      Non-IFRS Measures"
 (b)  Current production based on estimated average daily production for August
      2024; Estimate based on historical performance and engineered type curves for
      the Assets
 (c)  Based on engineering reserves assumptions using historical cost assumptions
      and NYMEX strip as of June 18, 2024 for the 12 month period ended July 31,
      2025; does not include the impact of any projected or anticipated synergies
      that may occur subsequent to acquisition  Purchase price multiple based on
      Net Purchase Price and Acquisition's estimated Next Twelve Months (NTM)
      Adjusted EBITDA (unhedged)

For Company-specific items, refer also to the Glossary of Terms and/or
Alternative Performance Measures found in the Company's  Interim Report for
the six months ended June 30, 2024.

For further information, please contact:

 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 Public Relations

 

About Diversified Energy Company PLC

Diversified is a leading publicly traded energy company focused on natural gas
and liquids production, transport, marketing, and well retirement. Through our
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.

Forward-Looking Statements

This announcement contains forward-looking statements (within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995). These
forward-looking statements, which contain the words "anticipate", "believe",
"intend", "estimate", "expect", "may", "will", "seek", "continue", "aim",
"target", "projected", "plan", "goal", "achieve" and words of similar meaning,
reflect the Company's beliefs and expectations and are based on numerous
assumptions regarding the Company's present and future business strategies and
the environment the Company will operate in and are subject to risks and
uncertainties that may cause actual results to differ materially. No
representation is made that any of these statements or forecasts will come to
pass or that any forecast results will be achieved. Forward-looking statements
involve inherent known and unknown risks, uncertainties and contingencies
because they relate to events and depend on circumstances that may or may not
occur in the future and may cause the actual results, performance or
achievements of the Company to be materially different from those expressed or
implied by such forward looking statements. Many of these risks and
uncertainties relate to factors that are beyond the Company's ability to
control or estimate precisely, including the risk factors described in the
"Risk Factors" section in the Company's Annual Report and Form 20-F for the
year ended December 31, 2023, filed with the United States Securities and
Exchange Commission. The pro forma financial information in this announcement
is for informational purposes only, is not a projection of our future
financial performance, and should not be considered indicative of actual
results that would have been achieved had the Acquisition actually been
consummated on the date or at the beginning of the period indicated.
Forward-looking statements speak only as of their date and neither the Company
nor any of its directors, officers, employees, agents, affiliates or advisers
expressly disclaim any obligation to supplement, amend, update or revise any
of the forward-looking statements made herein, except where it would be
required to do so under applicable law. As a result, you are cautioned not to
place undue reliance on such forward-looking statements.

Use of Non-IFRS Measures

Certain key operating metrics that are not defined under IFRS (alternative
performance measures) are included in this announcement. These non-IFRS
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 metrics in the same
way, the manner in which we have chosen to calculate the non-IFRS metrics
presented herein may not be compatible with similarly defined terms used by
other companies. The non-IFRS metrics should not be considered in isolation
of, or viewed as substitutes for, the financial information prepared in
accordance with IFRS. 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. We are unable to provide a quantitative reconciliation
of forward-looking Adjusted EBITDA to the most directly comparable
forward-looking IFRS measure because the items necessary to estimate such
forward-looking IFRS measure are not accessible or estimable at this time
without unreasonable efforts. The reconciling items in future periods could be
significant.

PV10

PV10 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, PV10 is based on a pricing methodology and discount factors that
are consistent for all companies. In this announcement, PV10 is calculated
using NYMEX pricing. It is not practicable to reconcile PV10 using NYMEX
pricing to standardized measure in accordance with IFRS at this time.
Investors should be cautioned that neither PV10 nor the Standardized Measure
represents an estimate of the fair market value of proved reserves.

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