Diversified Energy Co. PLC (NYSE:DEC) said it will buy privately held Canvas Energy in a $550 million deal that expands its footprint in Oklahoma. The acquisition includes producing wells and undeveloped acreage in Major, Kingfisher, and Canadian counties.
The Birmingham, Alabama-based company said the purchase will lift production by 13%, increase adjusted EBITDA by 18%, and free cash flow by 29%. Canvas produces about 147 million cubic feet equivalent per day, with reserves valued at nearly $690 million.
Diversified said the Oklahoma properties have EBITDA margins of about 70% and will immediately add to cash flow. Roughly 23 wells completed in the past year are included, along with acreage that provides future development opportunities. The company said overlapping infrastructure should help reduce costs and improve efficiency.
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Chief Executive Rusty Hutson Jr. called the purchase a "perfect fit" that strengthens the company's scale and cash flow. He said working with Carlyle on the financing lays the groundwork for more acquisitions. "This initial transaction serves as an important milestone in our relationship, and we look forward to growing our combined portfolio of high-quality assets," Hutson said.
The acquisition will be funded through 3.4 million newly issued shares, up to $400 million in Carlyle-backed securitization, and existing cash and borrowing capacity. Diversified expects to close the deal in the fourth quarter of 2025.
The deal highlights the role of private equity financing in U.S. shale. Investors will be watching whether Diversified achieves promised cash flow and efficiency gains.
Sector sentiment can also be tracked through the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) and the Energy Select Sector SPDR Fund (NYSE:XLE).
Price Action: DEC shares slipped 1.2% Monday to close at $14.87.
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