Diversified Energy Co. Plc agreed on Nov. 12 to sell undeveloped Haynesville Shale acreage it had recently acquired from Tanos Energy for approximately $72.8 million in cash.

“I am proud of our team’s actions to enhance the value of our recent Tanos acquisition, significantly reducing our net purchase price by successfully monetizing these assets,” commented Diversified CEO Rusty Hutson Jr. in a release by the company.

“The sale proceeds enhance our liquidity as we evaluate other value-accretive opportunities,” Hutson added.

Diversified had acquired Tanos earlier this year, continuing the company’s expansion in its newly established “central” regional focus area covering Louisiana, Texas, Oklahoma and Arkansas. The Birmingham, Ala.-based company had previously focused exclusively on buying PDP natural gas assets in the Appalachian Basin until a May 2021 acquisition added a footprint in Louisiana.

The acquisition of Tanos, which included Cotton Valley and Haynesville assets in Louisiana and Texas, was completed in August through a co-investment with funds managed by Oaktree Capital Management. Diversified had lined up a $1 billion acquisition partnership with the global investment firm in 2020 to pursue larger acquisition opportunities.

Net to Diversified, the sale on Nov. 12 includes nearly $33.7 million for 22,729 net acres of predominantly undeveloped Haynesville Shale leasehold in Harrison, Leon, Panola, Robertson and Rusk counties, and $3.6 million for 38 gross Haynesville Shale wells on the same acreage producing approximately 1,700 net Mcf/d as of November, representing just 2% of the production that Diversified originally acquired from Tanos, according to the company release.

Consistent with previous acquisitions, Diversified said it had ascribed no value to the undeveloped Haynesville leasehold in its transaction with Tanos.

“This transaction exemplifies our strategy of efficiently managing our producing assets and extracting maximum value from predominantly undeveloped resources,” Hutson explained further.

The divestiture effectively reduces Diversified’s investment in the previously announced Tanos transaction by 30% to $81 million from the original $118 million, net of purchase price adjustments. 

The company added that, as part of the divestiture agreement, Diversified will retain an overriding royalty interest on certain of the undeveloped leasehold in Panola and Rusk counties along with the development rights to all geologic formations other than the Haynesville Shale in the divested acreage.

Diversified expects to close the divestiture transaction in mid to late December subject to the purchaser's normal and customary diligence.

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