Diversified Energy To Buy Canvas Energy For Around $550 Mln; Deal To Be Completed In Q4

(RTTNews) - Diversified Energy Company Plc (DEC.L, DEC) Tuesday said that it has signed a deal to acquire independent oil and natural gas exploration and production company Canvas Energy for a total amount of around $550 million.

The acquisition adds top-functioning operated producing properties and acreage in Oklahoma, mainly in the Major, Kingfisher, and Canadian Counties. Additionally, the transaction includes 23 high-quality wells, which have been brought onboard and turned to sales within the last year.

The American gas and oil production company said that the deal will be funded through a combination of sources, which include the issuance of around 3.4 million new U.S dollar-denominated ordinary shares to the seller, following a mandatory commercial registration lock-up agreement. In addition, around $400 million will be raised through a privately rated, bilaterally structured asset-backed securitization, originated by Carlyle and backed by the acquired assets, the company added.

According to Diversified Energy, the remaining amount will be paid in cash, taken from the existing liquidity under its borrowing capacity, subject to any purchase price adjustments. The takeover is expected to be completed by the fourth quarter of fiscal 2025.

The company said that the $550 million purchase price shows a purchase price multiple of around 3.5x, based on expected next twelve months or NTM EBITDA of approximately $155 million, before synergies. Diversified Energy expects the transaction to bring about an around 18 percent rise in Adjusted EBITDA and around 29 percent increase in Free Cash Flow, buoyed by meaningful annual run-rate synergies.