Diversified Energy announced on 2 September that it had struck a deal to acquire Birch Permian Holdings for $1.8 billion.
The purchase of the privately held independent oil and gas producer will expand Diversified's position on the Texas side of the Permian Basin, adding approximately 500 gross operated wells and 46,000 acres. The majority of Diversified's pre-deal position of 187,000 acres is on the New Mexico side of the basin.
Diversified said the acquisition will increase its production by about 35% to 276,000 BOE/D. The company's current production mix comprises 71% natural gas and 29% liquids, compared with Birch's production profile of 70% liquids and 30% natural gas.
In gas-equivalent terms, Diversified said its pro forma gross sales volumes will increase to nearly 2.5 Bcfe/D.
The transaction is the largest in the company's history. Diversified also said it plans to pursue up to $10 billion in additional acquisitions in the region through its partnership with global investment firm Carlyle.
"This transaction will establish Diversified as a scaled operator in the nation's most important oil-producing basin and creates a strategic position from which we can pursue future consolidation opportunities across the Permian Basin,” Rusty Hutson, CEO of Diversified, said in a statement.
Diversified described the acquired assets as low decline and said they include approximately 150 locations permitted for enhanced oil recovery (EOR) operations. The company did not specify which EOR methods may be deployed but said initial pilot programs have delivered encouraging results.
The transaction also includes 12 production facilities, nine gathering facilities, and 60 miles of gathering pipelines. Diversified will assume ownership of five saltwater disposal sites, along with nearly 80 miles of water disposal and recycling pipelines.
The deal remains subject to customary closing conditions and regulatory approvals and is expected to close during the fourth quarter.