Diversified Energy Company has agreed to buy Birch Permian Holdings, Inc. and its affiliated companies from affiliates of Elliott Investment Management L.P. for approximately $1.8 billion. Chairman and CEO Rusty Hutson, Jr. called it the company's largest acquisition in its 25-year history.
Diversified is an upstream oil and gas producer and marketer with operations across four US basins. The Birch deal adds a Permian Basin position of 500 gross operated wells (480 net) across roughly 46,000 net mineral acres, plus the infrastructure that supports them. Diversified expects the acquisition to lift its own production by about 35% and its Adjusted EBITDA by about 55%, taking pro forma gross volumes under its operated control to approximately 2.5 Bcfepd, or about 1.6 Bcfepd net.
Deal terms
Diversified will fund roughly $1.5 billion of the purchase price through an asset-backed securitization arranged with Carlyle's Asset-Backed Finance and Capital Markets teams, with the balance coming from other customary financing sources, including its revolving credit facility. The company said the price reflects roughly a 3.3x multiple of Birch's Adjusted EBITDA and the PV-14 value of Birch's proved developed producing reserves. Diversified expects to close the acquisition in the fourth quarter of 2026, subject to customary closing conditions.
Birch by the numbers
| Metric | Figure |
|---|---|
| Gross purchase price | ~$1.8 billion |
| Current net production | ~68 Mboepd (~409 MMcfepd) |
| Production mix | ~38% oil, ~32% NGLs, ~30% gas |
| Proved reserves | ~1,168 Bcfe |
| PV-10 value | ~$2.0 billion |
| Net wells | 480 (500 gross operated) |
| Annualized Adjusted EBITDA | ~$548 million |
About 96% of Birch's wells are operated, with an average lease net revenue interest of roughly 77%, and about 75% were drilled in 2022 or earlier. Diversified said the deal will deliver EBITDA margins of about 80%. Birch's gathering, processing and water-disposal network includes 12 central production facilities and 9 well gathering facilities tied together by more than 60 miles of gathering pipeline, plus 5 water disposal facilities and more than 80 miles of water disposal and recycling pipeline. The central production facilities can process up to 345 Mbbl/d of oil and 310 MMcf/d of gas. Diversified also cited more than 150 permitted enhanced oil recovery locations on the acreage, with positive early pilot results, as an added lever for its Portfolio Optimization Program.
The Carlyle partnership
Alongside the Birch deal, Diversified and Carlyle expanded their strategic partnership from an original $2 billion framework to a broader arrangement. Under it, the two may pursue up to $10 billion of potential proved developed producing acquisition opportunities over time, subject to mutual agreement and deal-specific approvals.
Hutson said Birch is "one of the highest-quality operated asset positions" in the Permian and that the deal establishes Diversified "as a scaled operator" in the basin.
