Diversified Energy Company PLC (LSE:DEC) entered into a conditional agreement to acquire working interests in certain assets operated in the Central Region from Oaktree Capital Management, L.P. for approximately $410 million on March 19, 2024. Under the transaction, Diversified Energy will acquire Oaktree?s proportionate interest in the previously announced Indigo, Tanos III, East Texas, and Tapstone acquisitions (the ?Assets?) for an estimated gross purchase price of $410 million (approximately $386 million net), which includes the assumption of approximately $120 million in amortizing notes and a hedge book with a positive mark-to-market of approximately $70 million. The consideration is subject to customary purchase price adjustments and is expected to be satisfied through existing and expanded liquidity, the assumption of Oaktree?s proportionate debt of approximately $120 million associated with the ABS VI amortizing note, and approximately $90 million in deferred cash payments to Oaktree.

Additional liquidity for the acquisition may be generated from non-core asset sales and the potential issuance of a private placement preferred instrument. As part of the acquisition, Diversified will acquire certain hedging contracts from Oaktree that will provide ongoing protection despite the recent downturn in the gas market at volumes consistent with the Company?s overall hedging strategy while also maintaining strong long-term cash upside potential from the assets. The acquisition is conditional on the approval of DEC?s shareholders at a general meeting.

The acquisition is expected to be accretive. Jeremy Kennedy, Brandon Jones of Haynes and Boone, LLP acted as legal advisors to Diversified Energy. Michael Piazza, Rahul Vashi, Adam Whitehouse, Michael Cannon, Doug Horowitz, Christopher Milla, Jesse Myers, and Chris Haynes of Gibson, Dunn & Crutcher LLP acted as legal advisors to Oaktree.