Diversified Announces Accretive Acquisition of Birch
Creates a Scaled, Vertically Integrated Position in the
Acquisition Expected to Increase Production by ~35% and Adjusted EBITDA by ~55%
Additionally, the Acquisition represents a step change for Diversified and further solidifies the Company's vertically integrated, four-basin PDP operating model. With an estimated 35% increase in production(a) volume from relatively low decline assets, and estimated 55% increase in Adjusted EBITDA(b), Diversified expects to become an increasingly significant operator and marketer of oil and natural gas in
The Board determined the Acquisition to be in the best interests of the shareholders of the Company.
The Acquisition is valued at approximately
The expansion of our partnership with Carlyle is a testament to the attractive and broad opportunity set in PDP consolidation, Diversified's operational excellence, and the strong working relationship with the Carlyle organization.
Permian Transaction Rationale
- Building a Scaled Permian PDP Consolidation Platform: The Acquisition creates a significant PDP asset base in the
Permian Basin and establishes Diversified as a scaled operator within the basin. This enhanced operating presence is expected to provide an expanded platform for future consolidation as the Permian matures and an increasing inventory of long-life producing assets becomes available, well-suited to Diversified’s PDP-focused acquisition strategy. - High-Quality, Low-Decline Assets with Integrated Infrastructure: Birch provides a geographically dense, mature, predictable production base of 480 net wells with lower decline characteristics, which closely align with Diversified’s operating model. The concentrated acreage position is further supported by integrated production and water infrastructure, is expected to provide greater operational control, lower unit costs, and opportunities to capture margin across the value chain.
- Accretive Acquisition with Durable, High-Margin Cash Flow: The Acquisition is expected to be immediately accretive on key per-share financial metrics and add approximately
$548 million of annualized Adjusted EBITDA(b) from a high-margin asset base. The combination of vertical integration, low operating costs, ~80% EBITDA margins, and a mature production profile is expected to support durable free cash flow generation. - Increases Scale, Expands Commercial Opportunity: The Acquisition, Diversified’s largest acquisition to date, will represent another significant expansion in Diversified’s scale, increasing production(a) by ~35% and Adjusted EBITDA(b) by ~55%, while bringing pro-forma gross sales volumes from Diversified to ~2.5 Bcfepd. This increased scale will materially enhance Diversified’s relevance as a producer and marketer of oil, natural gas, and NGLs, creating opportunities for the Company’s in-house marketing organization to optimize pricing, transportation, market access, and commercial arrangements.
- EOR Adds a New Lever for Portfolio Optimization and Upside: Birch’s existing enhanced oil recovery (“EOR”) capabilities provide Diversified with an additional avenue to extend asset lives, improve recoveries, and generate incremental returns from its producing asset base as part of the Company’s Portfolio Optimization Program (“POP”). With more than 150 permitted EOR locations and encouraging results from initial pilot programs, Diversified believes these capabilities may provide meaningful upside potential beyond the value attributed to the assets’ existing production and cash flows.
Birch Details
- Gross purchase price of
~$1.8 billion - Net purchase price to reflect customary purchase price adjustments and effective date cash flows
- ~PV-14(c) value of PDP reserves and ~3.3x(b) Adjusted EBITDA multiple
- Current net production of ~68 Mboepd (~409 MMcfepd)(a)
- Production mix of ~38% oil, ~32% NGLs, ~30% gas
- ~96% operated, ~77% avg. lease NRI
- Proved reserves of ~1,168 Bcfe(d) and PV-10 of
~$2.0 billion (c)
- Estimated annualized Adjusted EBITDA of
~$548 million (b)- Integrated operating position delivers competitive LOE per barrel, estimated to deliver ~80% EBITDA margins
- Includes ~46,000 net mineral acres of commercially attractive core
Permian Basin leasehold with additional opportunity for Portfolio Optimization Program (“POP”)- 500 gross operated (480 net total) wells
- ~75% of wells with 2022 vintage or prior
- Integrated midstream footprint across gathering, processing, and water infrastructure
- 12 primary central production facilities ("CPF’s”), 9 well gathering facilities, 60+ miles of gathering pipeline
- CPF’s able to process up to 345 Mbblpd of oil and 310 Mmcfpd of gas
- 5 water disposal facilities and >80 miles of water disposal and recycling pipeline
Commenting on the Acquisition, Chairman and CEO
“I am thrilled to announce the acquisition of Birch, a premier
This transaction will establish Diversified as a scaled operator in the nation's most important oil-producing basin and creates a strategic position from which we can pursue future consolidation opportunities across the
For 25 years, Diversified has consistently proven our ability to acquire, optimize, and responsibly manage energy assets to create durable shareholder value. As North American resource development matures, we see significant opportunities emerging around long-life PDP assets and infrastructure-rich operated positions. Birch represents a perfect asset base for our focused and proven business model, providing immediate scale, strong cash returns, and a foundation for continued growth in the Permian for many years to come.”
Transaction Consideration
The Acquisition will be primarily funded through a combination of a privately rated asset-backed securitization originated and structured by Carlyle of approximately
Conference Call Details
The Company will host a conference call on
| US (toll-free) | +1 877-836-0271/+1 201-689-7805 |
| +44 (0)800 756 3429 | |
| Web Audio | https://www.div.energy/news-events/ir-calendarevents |
| Replay Information | https://ir.div.energy/financial-info |
An investor presentation regarding the Acquisition will be available on the Company's Investor Relations website at https://ir.div.energy/presentations in connection with the conference call.
Advisors
Footnotes:
a) Current production based on average daily production for Q2 2026 and estimated production for Birch as of
b) Next 12 months Adj. EBITDA inclusive of G&A and hedges, calculated using strip pricing as of 08/17/2026. Please see “Adjusted EBITDA” below for the definition of Adjusted EBITDA and important information regarding its calculation and use.
c) 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
d) Utilizes engineering reserves assumptions using historical cost assumptions and NYMEX pricing; does not include the impact of any projected or anticipated synergies that may occur subsequent to acquisition.
This announcement contains inside information for the purposes of Article 7 of the
For further information, please contact:
| +1 973 856 2757 | |
| dkris@dgoc.com | |
| Senior Vice President Investor Relations & Corporate Communications | www.div.energy |
| dec@fticonsulting.com | |
About Diversified Energy Company
Diversified is a leading publicly traded energy company focused on acquiring, operating, and optimizing cash-generating energy assets. Through our unique differentiated strategy, we acquire established assets and invest in them to improve environmental and operational performance until we retire 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", "opportunity" 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. Expected benefits of the Acquisition may not be realized and the Acquisition may not close on the terms described in this release at all. 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 on Form 10-K for the year ended December 31, 2025 and in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, each 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 should the Acquisition be consummated. Forward-looking statements speak only as of their date and neither the Company nor any of its directors, officers, employees, agents, affiliates or advisers undertakes 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.
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion, depreciation and amortization. Adjusted EBITDA includes adjustments for items that are not comparable period-over-period, namely, finance costs, accretion of asset retirement obligation, other (income) expense, (gain) loss on fair value adjustments of unsettled financial instruments, (gain) loss on natural gas and oil property and equipment, (gain) loss on sale of equity interest, unrealized (gain) loss on investment, costs associated with acquisitions, other adjusting costs, loss on early retirement of debt, non-cash equity compensation, (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 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. When evaluating this measure, we believe investors also commonly find it useful to evaluate this metric as a percentage of our total revenue, inclusive of settled hedges, producing what we refer to as our Adjusted EBITDA margin. We are unable to provide a quantitative reconciliation of forward-looking Adjusted EBITDA to the most directly comparable forward-looking GAAP measure because the items necessary to estimate such forward-looking GAAP measure are not accessible or estimable at this time without unreasonable efforts. Reconciling items in future periods could be significant.
PV-10
PV-10 is a non-GAAP financial measure that differs from a financial measure under GAAP known as "standardized measure of discounted future net cash flows" in that PV-10 is calculated without including future income taxes and discounted at 10 percent. The Company believes the presentation of PV-10 provides useful information because it is widely used by investors in evaluating oil and natural gas companies without regard to specific income tax characteristics of such entities. PV-10 is not intended to represent the current market value of the Company's estimated proved reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure as defined under GAAP. As used herein, PV-14 is the standardized measure of discounted future net cash flows, without including future income taxes, discounted at 14 percent.
Certain operating and reserve information relating to Birch included in this announcement was provided by Birch and/or the Sellers and has not been independently verified by the Company in all respects.
