Diversified Energy Company and its finance partner Carlyle Global Credit announced Wednesday a $1.175 billion purchase agreement for oil and gas assets in Oklahoma’s Anadarko Basin owned by Camino Natural Resources.
The deal adds at least 100 undeveloped drill locations across about 101,000 acres contiguous to Diversified’s existing inventory in the region. Diversified says it has identified more than 450 economic development locations across the consolidated acreage.
Through a partnership formed between Diversified and Carlyle last year, the acquisition will be funded through cash from Carlyle, Diversified’s credit facility and an asset-backed securitization from Carlyle. The ABS will be based on a special purpose vehicle created with Diversified based on cash flows from the producing assets. Diversified will be a minority owner in the ABS SPV and will operate the properties on a ~60 percent, ~40 percent Carlyle-Diversified split. Undeveloped and non-productive assets will be wholly owned by Diversified outside the ABS SPV structure.
Diversified is advised by Citi and Truist on finance and Kirkland & Ellis as outside legal counsel. Carlyle was advised on legal matters by Paul Hastings and Latham & Watkins. Jefferies is lead financial advisor to Camino with RBC Richardson Barr as co-advisor. Camino outside legal counsel is Vinson & Elkins.
Chief legal officer Ben Sullivan and deputy general counsel Jamie Adkins spearheaded the deal for Birmingham-based Diversified. Camino is headquartered in Denver.
The Kirkland team was led by John Kaercher (Austin), Jonathan Strom (Houston), Chad Smith (Houston) and Tad Bardenwerper (New York). The also included Rizwan Popatia (Houston), Alexandra David (Houston), Michael Urschel (New York), Wilson Carneiro (New York), Lucas Spivey (Houston), James Bedotto (Dallas), Katie Schneller (Dallas), David Wheat (Dallas), Joe Tobias (Dallas), Brooke Schafer (Dallas), Paul Tanaka (San Francisco), James Dolphin (Houston) and Courtney Tibbetts (New York).
Diversified CEO Rusty Hutson Jr. said the newly acquired assets are perfect for the creative, off-balance-sheet financing evidenced by the deal.
“The assets are a perfect fit with our existing Oklahoma operations and offer meaningful opportunities for material synergies upon completion of the acquisition. The transaction adds scale to our regional footprint and remains consistent with our strategy of acquiring high-quality, producing assets at attractive valuations,” Hutson said.
Akhil Bansa, head of asset-backed at Carlyle, cited the storied investment firm’s novel finacing of the partnership: “This transaction demonstrates what’s possible when structuring expertise and long-term capital are paired with a best-in-class operator. We’re proud to work alongside Diversified to create a financing solution purpose-built for these assets, and we see this as a model for how Carlyle approaches asset-backed investing.”