Diversified Energy Company has announced a significant expansion of its operations in Texas through the acquisition of high-working interest natural gas properties from Crescent Pass Energy. This strategic move, expected to close in the third quarter of 2024, involves approximately 170,000 acres in East Texas and the Freestone Trend, areas that complement the company's existing assets in the region.
The assets currently produce a net 38 MMcfepd, equivalent to 6 Mboepd, with a notably low annual decline rate of around 9%. This low decline rate is a critical factor for Diversified Energy, as it ensures stable production levels and long-term cash flows, reducing the need for constant reinvestment to maintain output. CEO Rusty Hutson Jr. highlighted the acquisition's alignment with the company's strategy of focusing on assets with industry-leading corporate declines and capital intensity.
This transaction is notable for its use of shares from Diversified Energy's U.S. listing as part of the purchase price, showcasing the company's financial flexibility and confidence in its future prospects. This approach may influence how energy companies structure deals in the future, especially in a competitive market where strategic acquisitions are key to growth.
The acquisition not only strengthens Diversified Energy's foothold in a key natural gas-producing area but also positions the company for long-term stability in the volatile energy sector. By focusing on assets with low decline rates and high working interests, Diversified Energy is setting a precedent for sustainable growth and operational efficiency that could serve as a model for the industry.
For investors and industry observers, this move signals Diversified Energy's commitment to growth and its confidence in the natural gas market's future. The expansion in Texas, a pivotal state in U.S. energy production, could enhance the company's market position and influence, especially as the global energy mix continues to evolve towards cleaner burning fuels.
The completion of this acquisition will be a significant event for the natural gas sector, potentially setting the stage for further consolidation as companies seek to optimize their asset portfolios and improve operational efficiencies. For more information on Diversified Energy's operations and strategies, visit https://www.diversifiedenergy.com.
