Diversified Energy to acquire high-working interest, natural gas properties and related facilities located in east Texas from Sheridan Production.
The Acquisition is expected to be funded through existing liquidity from Diversified’s senior secured bank facility. The Company expects to close the Acquisition in the second quarter of 2026, subject to customary closing conditions.
Acquisition Highlights
- Purchase price of $245 million in cash before anticipated, customary purchase price adjustments
- Net purchase price represents estimated ~PV-15 valuation
- 2026 estimated net production of ~62 MMcfepd (~10 Mboepd)(a) with low annual declines of ~6%(b)
- Complements Diversified’s industry-leading corporate declines and low capital intensity
- Gas-weighted production with ~72% gas volumes
- Estimated NTM EBITDA of ~$52 million(c)
- PDP Reserves of ~397 Bcfe with estimated PV-10 of $310 million(b)
- Assets are contiguous with Diversified's existing East Texas assets
- Proximity to existing assets creates immediate line of sight to future operating efficiencies
- Includes ~75,000 acres of commercially attractive leasehold in East Texas
Commenting on the Acquisition, CEO Rusty Hutson, Jr. said:
'The target assets are a perfect fit with our existing East Texas operations and offer meaningful opportunities for material synergies upon completion of the Acquisition. The accretive transaction adds scale to our East Texas regional footprint and remains consistent with our strategy to focus on acquiring high-quality, low-decline producing assets at attractive valuations. These assets will benefit from our Smarter Asset Management approach to improve production, enhance margins, and grow free cash flow. Additionally, we anticipate that incremental cash flow can be generated from our Portfolio Optimization Programs. Our Company has a proven, demonstrated track record of delivering value to shareholders from our strategy of acquiring, operating, and optimizing established cash-generating energy assets.'
Bolt-On Addition of Low-Decline PDP Assets
The Acquisition's estimated NTM EBITDA is approximately $52 million and reflects attractive valuation of approximately PV-15. The Acquisition is expected to add approximately 62 MMcfepd (~10 Mboepd) of production and approximately 397 Bcfe reserves with a PV-10 of $310 million(b). Additionally, the production profile of the Assets are highly complementary to the Company's existing portfolio and operational strategy, with low annual production declines of ~6% per year that would result in an unchanged consolidated decline rate, pro forma for the Acquisition. The Assets include additional undeveloped acreage that presents potential upside opportunities in line with Diversified's demonstrated ability to unlock value on non-core assets and the Assets provide opportunities to realize synergies attributable to Diversified’s operating scale and asset density.
a) Current production based on estimated average daily production for 2026; Estimate based on historical performance and engineered type curves for the Assets.
b) Estimated annual rate of production declines and 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 March 1, 2026 and based on the NYMEX strip at February 2, 2026, with terminal price assumptions of $3.75/MMBtu and $65.00/Bbl for natural gas and oil, respectively.
c) Based on engineering reserves assumptions using historical cost assumptions and NYMEX strip as of February 2, 2026 for the 12 month period ended March 1, 2027; does not include the impact of any projected or anticipated synergies that may occur subsequent to acquisition.
Source: Diversified Energy
