Diversified Energy Company Plc boosts liquidity with securitisation of shale assets in Texas

“We look forward to further ABS transactions this year, given the favorable commodity price environment and growing investor demand for securitizations of well-developed oil and gas assets,” said Rusty Hutson. .

Diversified Energy Company PLC (LSE: DEC, OTCQX: DECPF) has announced the securitization of the Barnett Shale assets in North Texas.

The company pointed out that it represented the company’s second ABS and fourth sustainability-related ABS since late 2019. It added that it showed the growing depth of investors for this type of product.

Proceeds from the securitization are $160 million (gross) and are being used to repay funds under a reserve-based loan facility – which DEC says results in liquidity of over $400 million (pro forma as of December 31, 2021).

The ABS note will carry a fixed coupon of 4.95% and is rated BBB by Fitch. It has a fully amortized expected maturity in September 2030.

Moodys, meanwhile, provided an ESG assessment, and DEC notes that the coupon rate is “sustainability-linked.”

“We are thrilled to close our fourth ABS in less than a month after closing our third ABS,” said DEC Chief Executive Officer Rusty Hutson.

“This transaction represents the first group of assets we have securitized outside of our Appalachian region, demonstrating our ability to securitize assets at low, fixed rates in both of our operating regions.

“As with our most recent ABS and reflecting our broad ESG commitments, we are delighted to once again incorporate our ESG score from Moody’s ESG Solutions into the ratings coupon.”

Hutson added, “Liquidity is the highest in Diversified’s history, strengthening our ability to negotiate attractive acquisition opportunities without relying on new equity inflows.

“Having significantly expanded our portfolio of producing assets last year with our entry into the Central region, we look forward to pursuing further ABS transactions this year given a favorable commodity price environment and the growing investor demand for securitization of well-mined oil and gas assets. .”

The assets used in the ABS were previously pledged under the RBL, representing approximately 9% of the facility’s collateral.

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