Diversified Energy Completes $200 Million Sale of Appalachia Natural Gas Assets
(P&GJ) — Diversified Energy Company Plc announced that it closed on a strategic transaction that has unlocked additional value from its existing asset base, the company announced on Jan. 2.
In a nutshell, the company sold producing assets in Appalachia to a Special Purpose Vehicle (SPV) named DP Lion Equity Holdco LLC. In this innovative deal, Diversified retained a 20% minority interest and operational control of the assets.
The transaction yielded proceeds of approximately $200 million for Diversified, involving an Asset Backed Securitization placed at the SPV and an 80% equity interest sale in the SPV for around $30 million. The net proceeds were used to pay down outstanding borrowings under the company's Sustainability-Linked Loan, resulting in an approximate 12% reduction in net debt. The remaining funds will be allocated for general corporate purposes.
The implied valuation of the transaction represents a multiple of 5.7 times the expected hedged 2024 EBITDA of approximately $35 million. The assets sold by the SPV were previously included as collateral on Diversified's Sustainability-Linked Loan, with a PV-10 of approximately $230 million (gross production ~50 MMcfe per day) based on forward-looking commodity prices. This adjustment led to the redetermination of the borrowing base for the company's revolving credit facility to $305 million.
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