Core Viewpoint - Diversified Energy Company is expanding its leadership position in Oklahoma through the acquisition of Canvas Energy for approximately $550 million, which is expected to enhance its financial performance significantly by increasing adjusted EBITDA and free cash flow [1][2][5]. Transaction Highlights - The acquisition will add approximately 23 high-quality wells and complementary operated producing properties in Oklahoma, leading to an estimated 18% increase in adjusted EBITDA and a 29% increase in free cash flow [1][5]. - The current production levels for Diversified and Canvas are approximately 1,135 MMcfe/d and 147 MMcfe/d, respectively, with a commodity mix of 73% natural gas for Diversified and 43% for Canvas [4]. - The acquisition is expected to close in the fourth quarter of 2025 and will be funded through a combination of cash, asset-backed securitization, and the issuance of approximately 3.4 million shares to the seller [5][7]. Financial Metrics - The estimated NTM adjusted EBITDA for Canvas is approximately $155 million, contributing to a combined estimated adjusted EBITDA of around $850 million for Diversified [4][5]. - The purchase price represents a multiple of approximately 3.5x on NTM EBITDA, with Canvas having a PV-10 of total proved reserves estimated at $1.4 billion [4][5]. Strategic Rationale - The acquisition is expected to create meaningful synergies and operational efficiencies due to significant overlap in Central Oklahoma, with a combined operational footprint of approximately 1.6 million net acres [5][6]. - Diversified's established integration playbook is anticipated to unlock sustainable value through effective integration of the acquired assets [2][6]. Management Commentary - The CEO of Diversified Energy emphasized that this acquisition strengthens the company's footprint in Oklahoma and provides opportunities for margin enhancement and cash flow growth [6].
Diversified Energy Expanding Leadership Position in Oklahoma with Accretive Acquisition of Canvas Energy