Diversified Energy has agreed to acquire Birch Permian Holdings for approximately $1.8 billion, in the largest acquisition in the company’s 25-year history and a major expansion of its position in the Permian Basin.
The deal will add around 68,000 barrels of oil equivalent per day of net production and is expected to increase Diversified’s production by approximately 35%. Adjusted EBITDA is expected to increase by around 55%, giving the company a substantially larger producing asset base.
Birch owns approximately 46,000 net mineral acres in the core Permian Basin, with around 500 gross operated wells and an existing production mix of approximately 38% oil, 32% natural gas liquids and 30% gas. The assets also include gathering, processing and water infrastructure, giving Diversified control across a larger part of the production chain.
The acquired assets are expected to generate annualised adjusted EBITDA of approximately $548 million. Diversified said the integrated operating position should support EBITDA margins of around 80%, while the concentration of the assets within its existing Permian footprint provides opportunities to improve operations and infrastructure utilisation.
The acquisition is also intended to give Diversified a larger platform for further consolidation in the Permian. Management has identified the basin as an area where additional producing assets can potentially be acquired and integrated into its existing operations.
The transaction is being funded primarily through approximately $1.5 billion of asset-backed securitisation arranged through Diversified’s partnership with Carlyle, alongside other financing sources and available liquidity under its revolving credit facility. The Carlyle relationship has also been expanded, with the two companies able to pursue up to $10 billion of potential future producing asset acquisitions, subject to individual transaction approvals.
Diversified expects the Birch acquisition to close during the fourth quarter of 2026, subject to customary closing conditions and regulatory approvals.
Diversified Energy Company plc (LON:DEC, NYSE:DEC) is an independent energy company engaged in the production, marketing, transportation and retirement of primarily natural gas and natural gas liquids related to its U.S. onshore upstream and midstream assets.
