Diversified Energy and Oaktree to acquire Tanos Energy’s assets
6 July 2021 hydrocarbons-technology.com
Diversified Energy, together with Oaktree Capital Management, has agreed to acquire certain natural gas assets in the US from Tanos Energy Holdings III for $308m.
The firms will purchase Cotton Valley and Haynesville upstream assets and related facilities in the states of Louisiana and Texas.
These include 390 net operated wells, which have a combined production capacity of 14,000 barrels of oil equivalent per day.
Diversified Energy will have a 51.25% working interest in the assets while Oaktree will own the remainder.
The deal represents the first participation for Oaktree under a joint-participation agreement signed in October 2020.
However, Diversified Energy’s stake in the assets is expected to rise to 60% once Oaktree reaches a 10% internal rate of return (IRR) on its investment.
Diversified Gas & Oil CEO Rusty Hutson Jr said: “Oaktree’s participation not only demonstrates the attractive nature of these acquisitions but also affords diversified additional liquidity and line of sight to identify and pursue opportunities while continuing to maintain a strong balance sheet.”
The transaction, which is subject to customary diligence, reviews and approvals, is scheduled to close in mid-August 2021.
Diversified Energy will finance its portion of the transaction using cash reserves and existing credit capacity.
Additionally, Oaktree agreed to acquire 48.75% of the assets that diversified recently acquired in the Cotton Valley/Haynesville region from Indigo Minerals for $58m.
Separately, Diversified Energy concluded the acquisition of certain upstream assets and related infrastructure within its Central Regional Focus Area from Blackbeard Operating for a net consideration of around $166m.
The acquisition forms part of the firm’s efforts to broaden its operating footprint within the Central Regional Focus Area.
It also marks the entry of Diversified Energy into the historic Barnett producing area.
Hutson Jr said: “Similar to our nearby and recently closed acquisition of Indigo assets in the Cotton Valley area, the Barnett area provides access to a portfolio of future consolidation opportunities, which meet our preferred asset criteria and afford us the opportunity to build scale and operating efficiencies.”