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LONDON - Diversified Energy Company PLC (LSE:DEC; NYSE:DEC) has announced the completion of its acquisition of natural gas properties and related infrastructure from Summit Natural Resources, as well as the issuance of a $530 million asset-backed securitization note, termed ABS X. The transaction, which closed today, is expected to enhance the company’s cash flow and expand its midstream operations in Virginia, West Virginia, and Alabama.
The acquisition, valued at approximately $42 million, brings current net production to around 12 million cubic feet equivalent per day and proven developed producing (PDP) reserves of 65 billion cubic feet equivalent. Diversified Energy has also highlighted the strategic value of the acquired midstream pipeline assets and their potential to improve commodity prices and margins.
In tandem with the acquisition, Diversified Energy has refinanced existing debt through the issuance of the ABS X note under a master trust structure. This strategic move, backed by improved hedging profiles, is anticipated to add roughly 40% to the EBITDA of the refinanced assets. The offering was significantly oversubscribed, with orders from 20 unique investors, reflecting confidence in the company’s cash flow quality and responsible issuance practices. The notes have been rated investment grade and carry a blended fixed coupon of approximately 6.4% in the A tranche.
Sustainable Fitch provided a Second Party Opinion, confirming that the key performance indicators of the securitization align with the International Capital Markets Association’s sustainability-linked bond principles. This supports Diversified’s commitment to integrating its financing with its sustainability strategy.
Rusty Hutson, Jr., CEO of Diversified, expressed enthusiasm for the acquisition’s potential to generate additional revenue through the sale of environmental credits from increased coal mine methane production. CFO Brad Gray emphasized the strategic refinancing’s success in improving asset-level cash flow and reducing overall capital costs.
Barclays (LON:BARC) Capital, Inc. served as the sole structuring advisor and placement agent for the securitization, with additional support from Mizuho (NYSE:MFG) Securities USA LLC, KeyBanc Capital Markets Inc., and Legado Capital Advisors, LLC as co-placement agents. Detring Energy Advisors advised Summit Natural Resources on the sale.
The information for this report is based on a press release statement from Diversified Energy Company PLC.
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