Diversified Energy to Acquire Birch for $1.8 Billion

en.Wedoany.com Reported - On September 2, Diversified Energy signed a definitive acquisition agreement to acquire Birch Permian Holdings and affiliated companies from affiliates of Elliott Investment Management, with a total transaction value of approximately $1.8 billion. Birch's primary assets are located in the Permian Basin in the United States. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approvals and other customary closing conditions. The agreement also includes a $50 million termination fee.

Birch currently produces approximately 68,000 barrels of oil equivalent per day, of which crude oil accounts for 38%, natural gas liquids 32%, and natural gas 30%. The transaction involves approximately 46,000 net acres of Permian Basin mineral acreage and 480 net wells, with approximately 96% of production operated by Birch; approximately 75% of the wells were brought online in 2022 or earlier. Proved reserves of the assets are approximately 1.168 trillion cubic feet of natural gas equivalent, with a PV-10 valuation of approximately $2 billion.

Birch also owns gathering, processing, and water infrastructure supporting its upstream production, including 12 major central production facilities, 9 wellhead gathering facilities, and over 60 miles of gathering pipelines. The central production facilities have a maximum processing capacity of approximately 345,000 barrels of crude oil per day and 310 million cubic feet of natural gas per day; the water system includes 5 produced water disposal facilities and over 80 miles of water disposal and recycling pipelines.

According to Diversified Energy's estimates, Birch's assets are expected to generate approximately $548 million in annualized adjusted EBITDA over the next 12 months, corresponding to a transaction price of approximately 3.3 times adjusted EBITDA. Upon completion of the transaction, Diversified Energy's total production is expected to increase by approximately 35%, and adjusted EBITDA is expected to increase by approximately 55%. The company's expected total operated production will reach approximately 2.5 billion cubic feet of natural gas equivalent per day, with net production of approximately 1.6 billion cubic feet of natural gas equivalent per day.

The acquisition will be financed primarily through approximately $1.5 billion in asset-backed securities financing, originated and structured by Carlyle, with the remaining funds to be provided by Diversified Energy's existing revolving credit facility and other financing sources. Diversified Energy and Carlyle have also expanded their partnership, planning to pursue potential acquisition opportunities of up to $10 billion around proved developed producing assets in the future.

Birch currently also holds more than 150 permitted enhanced oil recovery locations and has initiated preliminary pilots. Diversified Energy plans to integrate the relevant enhanced oil recovery capabilities into its existing asset optimization system; however, the potential incremental production value has not been included in the existing production and cash flow valuation of the acquired assets.

Diversified Energy had previously entered the Permian Basin through acquisitions. In March 2025, the company completed its acquisition of Maverick Natural Resources, with an initially announced total consideration of approximately $1.275 billion, which provided Diversified Energy with its first assets in the Northern Delaware Basin. Following the acquisition of Birch, its Permian Basin assets will gain new scaled production areas, well patterns, and supporting gathering and water treatment systems.