Diversified Energy Expands Oklahoma Footprint with Canvas Energy Acquisition

Diversified Energy Company PLC (LSE:DEC; NYSE:DEC) announced a definitive agreement to acquire Canvas Energy for approximately $550 million, a move expected to bolster the company's financial performance and operational scale.

The acquisition, focused on complementary producing properties in Oklahoma, is projected to deliver increases in both Adjusted EBITDA and Free Cash Flow.

The Canvas Energy acquisition is anticipated to drive an approximate 18% increase in Adjusted EBITDA and a 29% increase in Free Cash Flow for Diversified Energy.

The financial uplift is underpinned by a projected 13% increase in production volumes, coupled with the addition of proved reserves. The strategic rationale centers on enhancing Diversified's existing operational base in the region.

The acquired assets are primarily located in Major, Kingfisher, and Canadian Counties in Oklahoma, offering synergistic opportunities with Diversified's current holdings.

The company anticipates leveraging adjacent acreage to optimize production efficiencies and reduce operational costs. This targeted expansion aligns with Diversified's strategy of acquiring and efficiently managing mature, producing assets.

The initial funding for the transaction is being sourced from the Carlyle Strategic Partnership, highlighting external confidence in Diversified Energy's business model and growth strategy.

The company's focus on acquiring and optimizing mature assets continues to be a key differentiator in the energy sector. The strategic use of the Carlyle partnership to fund the acquisition shows financial prudence and reinforces the company's growth trajectory.

From an investor perspective, the acquisition presents a compelling case for long-term value creation. The anticipated increases in Adjusted EBITDA and Free Cash Flow, coupled with operational synergies, position Diversified Energy for sustained growth and profitability. However, investors should closely monitor the integration process and the realization of projected cost savings.