Diversified Energy Company PLC (LON:DEC; NYSE:DEC) has announced that it has entered into an agreement to acquire Canvas Energy for total consideration of approximately $550 million. The Acquisition adds complementary operated producing properties and acreage positions in Oklahoma, concentrated in Major, Kingfisher, and Canadian Counties. Included in the Acquisition are approximately 23 high quality wells that have been turned to sales in the last 12 months.
The Acquisition complements Diversified’s existing Oklahoma asset portfolio and is underpinned by high EBITDA margins(a) of ~70%, contributing an estimated $155 million of NTM Adjusted EBITDA(c) before any anticipated synergies. Diversified’s established integration playbook and corporate infrastructure are anticipated to unlock significant and sustainable value with fast, effective and efficient integration. Familiarity with the asset base and the combined operational density provides for significant expense saving opportunities supporting Diversified’s cash flow optimization focus.
TRANSACTION HIGHLIGHTS
- Purchase price of ~$550 million with a purchase price multiple of ~3.5x on NTM EBITDA(c)
- Current net production of ~147 MMcfepd (24 Mboepd)(b)
- ~13% increase to stand alone Diversified(b)
- Proved PV-10 of ~$690 million(h), and ~200 MMBoe of Total Reserves(g)
- Estimated NTM EBITDA of ~$155 million(c), before anticipated synergies
- ~18% & ~29% expected increase in Adj. EBITDA and Free Cash Flow, respectively
- Anticipate meaningful annual run rate synergies
- Significant operational overlap in Central Oklahoma, with a combined ~1.6 million net acres
- Acquisition includes commercially attractive undeveloped acreage with meaningful development locations, providing optionality for portfolio optimization activities
- Purchase price to be funded through a privately rated bilaterally structured asset-backed securitization originated by Carlyle, existing liquidity, and issuance of ~3.4 million Diversified shares to the Seller with an expected close of the Acquisition during the fourth quarter of 2025
| USD Millions unless otherwise noted | Diversified | Canvas |
| Current Production (MMcfe/d)(b) | ~1,135 | ~147 |
| Commodity Mix | ~73% Natural Gas ~27% Liquids | ~43% Natural Gas ~57% Liquids |
| 2025E Adj. EBITDA / NTM EBITDA(c) | ~$850 | ~$155 |
| 2025E Free Cash Flow / NTM FCF(d) | ~$420 | ~$123 |
| EV/2025E Adj. EBITDA / NTM EBITDA(e) | ~4.5x | ~3.5x |
| Leverage(f) | 2.6x | 0.6x |
| PV-10 of Total Proved Reserves(g) | ~$5.8 Billion | ~$1.4 Billion |
| PV-10 of PDP(h) | ~$5.4 Billion | ~$0.7 Billion |
The Acquisition is, in the Board’s opinion, in the best interests of the shareholders of the Company as a whole.
Commenting on the Acquisition, CEO Rusty Hutson, Jr. said:
“This purchase strengthens Diversified by further expanding our footprint in our Oklahoma operating area with targeted assets that are a perfect fit for increasing our scale, allowing for synergy capture and providing meaningful opportunities for margin enhancement, that ultimately will grow and bolster our cash flow. We are excited to leverage our strategic partnership with Carlyle for funding accretive acquisitions and are pleased with the collective team’s collaboration. This initial transaction serves as an important milestone in our relationship and we look forward to growing our combined portfolio of high quality assets. Importantly, this acquisition extends our proven track record of acquiring cash generating energy assets at attractive valuations. We remain committed to our capital allocation strategy and believe the accretive nature of this transaction on per share metrics creates significant long-term value for shareholders.”
TRANSACTION CONSIDERATION
The Acquisition will be funded through a combination of the issuance of approximately 3.4 million new U.S. dollar-denominated ordinary shares direct to the Seller, a privately rated and bilaterally structured asset-backed securitization originated by Carlyle of up to $400 million supported by the Assets, along with the balance in cash from existing liquidity under the Company’s borrowing capacity, subject to any purchase price adjustments. The ordinary shares will be subject to a customary commercial registration lock-up agreement. The Company expects to close the Acquisition during the fourth quarter of 2025.
ADVISORS
Kirkland & Ellis LLP is serving as legal advisors, and KeyBanc Capital Markets is serving as financial advisor to Diversified Energy on the Acquisition. Legado Capital Advisors, LLC and TCG Capital Markets are serving as joint structuring agents and advisors on Diversified’s debt financing in connection with the Acquisition. Evercore is serving as Canvas’s financial advisor. BofA Securities, Inc. is also serving as a financial advisor to Canvas. Sidley Austin LLP is serving as legal advisor to Canvas.
UK LISTING RULES
The Acquisition, because of its size in relation to Diversified, constitutes a “significant transaction” for the purposes of the Listing Rules, and is therefore notifiable in accordance with UKLR 7.3.1R and 7.3.2R. Additional details as required under the Listing Rules are presented in Appendix 1.
PRESENTATION AND WEBCAST
Diversified will host a conference call and webcast Tuesday, September 9th at 1:30 p.m. BST (8:30 a.m. EST) to discuss the Acquisition.
The conference call details are as follows:
| U.S. (toll-free) | + | 1 877 836 0271 |
| U.K. (toll-free) | + | 44 (0)800 756 3429 |
| Webcast | https://www.div.energy/news-events/ir-calendarevents | |
| Replay Information | https://ir.div.energy/financial-info |
A presentation detailing the acquisition will be posted to the Company’s website before the conference call. The presentation can be found at https://ir.div.energy/presentations.
Footnotes:
a) Based on historical operating results using total company lease operating statement (LOS) report for the first 9 months of 2024 provided by Canvas management
b) Diversified exit rate production for June 2025. Canvas Energy production as of July 2025
c) Diversified 2025 Management Adjusted EBITDA Guidance (midpoint of range), as previously announced by Diversified Internal Management Projections for Canvas NTM EBITDA for the twelve months based upon the effective date of July 1, 2025; for more information, please refer to the “use of Non-IFRS and Non-GAAP Measures.”
d) Diversified 2025 Management Adjusted FCF Guidance as previously announced by Diversified and includes the value of anticipated cash proceeds from 2025 asset optimization, Internal Management Projections for Canvas for the twelve months based upon the effective date of July 1, 2025; for more information, please refer to the “use of Non-IFRS and Non-GAAP Measures.”
e) Diversified Enterprise Value as of August 28, 2025 and 2025 Adjusted EBITDA Guidance (midpoint of range) as previously announced by Diversified. Canvas Enterprise Value based on Gross Purchase Price and NTM EBITDA based upon Internal Management Projections for the twelve months based upon the effective date of July 1, 2025; for more information, please refer to the “use of Non-IFRS and Non-GAAP Measures.”
f) Diversified Net Debt to EBITDA as of August 11, 2025 and 2025 Adjusted EBITDA Guidance midpoint of range) as previously announced by Diversifie. Canvas Energy Leverage based on current Canvas corporate debt of $98M and NTM EBITDA.
g) Diversified Total Proved PV-10 as of August 11, 2025. Canvas Total Proved PV-10 as of March 21, 2025, including producing wells, and undeveloped wells, as provided by the Canvas; for more information, please refer to “Use of Non-IFRS and Non-GAAP Measures.”
h) Diversified PDP PV-10 as of August 11, 2025. Canvas PDP PV-10 includes producing wells, current wells in progress and certain development evaluation locations; based upon internal Company analysis, determined in accordance with generally accepted PRMS standards, using current strip prices as of August 7, 2025; for more information, please refer to “Use of Non-IFRS and Non-GAAP Measures.”
