Diversified Energy expands Permian scale with $1.8bn Birch deal

Oil prices surged due to Middle East tensions, with Brent crude at $101.21. The U.S. Energy Information Administration and Goldman Sachs revised forecasts, citing delivery risks. Enbridge (ENB) acquired Tallgrass Energy's crude oil business for $2.55B. Williams (WMB) completed a $5.5B acquisition of Momentum Midstream. Diversified Energy (DEC) agreed to buy Birch Permian for $1.8B. Tamarack Valley (TVE) and Headwater (HWX) merged in a $10B deal, focusing on existing assets.

Diversified Energy Company (DEC) agreed to acquire Birch, a Permian Basin producer, for $1.8bn, expecting a 35% production and 55% EBITDA increase. Birch contributes 68,000 boe/d and $548m annual EBITDA. DEC plans to fund the deal with a $1.5bn securitisation. Peel Hunt rates DEC 'buy' up to 3,000p, with shares trading at 1,123.32p, down 0.8%.

Diversified Energy (NYSE:DEC) is acquiring Birch for $1.8B, increasing its Permian production to 77,000 barrels of oil equivalent per day and adjusted EBITDA to $612M. The deal is expected to boost overall production by 35% and adjusted EBITDA by 55%, with financing from asset-backed securities and available liquidity. The acquisition is projected to double free cash flow generation and deleverage the company by $2B over four years, according to the company.

Diversified Energy (DEC) has underperformed over 5 years, but its low P/E ratio (2.4x) and high value score suggest undervaluation. The $1.8B Birch acquisition may boost production and cash flow but introduces risks. The stock's valuation gap depends on market perception of the deal and execution.

Diversified Energy (DEC) agreed to acquire Birch Permian for $1.8B, its largest deal in 25 years. The transaction, expected to close in Q4 2026, expands DEC's operations into the Permian Basin, adding 68,000 boe/d of production and $548M in annualized EBITDA. Funding includes $1.5B in asset-backed securities structured with Carlyle, aiming to limit equity dilution. DEC's CEO called Birch a high-quality asset, positioning the company as a scaled operator in the Permian.

Diversified Energy Company (DEC) announced the acquisition of Birch Permian Holdings for $1.8B, expecting a 35% production and 55% Adjusted EBITDA increase. The deal, funded by Carlyle and other sources, expands DEC's Permian Basin footprint and is expected to close in Q4 2026. The acquisition is DEC's largest to date and is expected to be immediately accretive to key financial metrics.