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, with a notably low annual decline rate of around 9%, which is pivotal for sustaining production levels and ensuring long-term cash flows.
The acquisition is a testament to Diversified Energy's focus on assets with low decline rates and high working interests, aligning with its strategy for sustainable growth and value creation for shareholders. By utilizing shares from its U.S. listing as part of the purchase price, the company not only showcases its financial flexibility but also sets a precedent for leveraging equity in future acquisitions. This approach reflects confidence in the company's future and may influence how energy companies structure deals in a competitive market.
For the natural gas industry, where rapid production declines can necessitate constant reinvestment, Diversified Energy's focus on assets with industry-leading corporate declines and capital intensity is particularly significant. The company's growth-through-acquisition strategy, combined with operational efficiency, could serve as a model for others in the sector facing challenges from fluctuating energy prices and environmental scrutiny.
This expansion in Texas, a key area for U.S. energy production, not only strengthens Diversified Energy's market position but also highlights the ongoing importance of natural gas in the global energy mix. As the energy landscape evolves, with a growing emphasis on cleaner burning fuels, natural gas assets remain crucial for meeting energy demands and potentially serving as a bridge to more renewable energy sources.
The completion of this acquisition will be a milestone for Diversified Energy, signaling its commitment to growth and confidence in the natural gas market's future. It may also prompt further consolidation in the sector, as companies seek to optimize their portfolios and improve efficiencies in an increasingly competitive environment. For more information on Diversified Energy's operations, visit https://www.diversifiedenergy.com.
