Shearman & Sterling represented Diversified Energy Company in connection with a Purchase and Sale Agreement to acquire certain natural gas assets from Tanos Energy Holdings III, together with Oaktree. Pursuant to the terms of the Purchase and Sale Agreement, Diversified and Oaktree will pay Tanos an aggregate purchase price of $308 million in cash, subject to customary adjustments. The acquisition will cover Cotton Valley Shale and Haynesville Shale upstream oil and gas assets and related facilities in the States of Louisiana and Texas. Included in the purchased assets are 390 net operated wells, which have a combined production capacity of 14,000 barrels of oil equivalent per day.
Diversified will have a 51.25 percent working interest in the purchased assets, while Oaktree will own the remainder. The deal represents the first participation for Oaktree under a joint participation agreement between Diversified and Oaktree signed in October 2020. Pursuant to the terms of the joint participation agreement, Diversified’s stake in the assets is expected to rise to 60 percent once Oaktree reaches a 10 percent IRR on its investment. The transaction, which is subject to customary diligence, reviews and approvals, is scheduled to close in mid-August 2021.
Diversified is an independent energy company focused on acquiring and enhancing primarily natural gas producing assets and related midstream infrastructure in the U.S. onshore, with current operations in the Appalachia Basin and the central U.S. states of Louisiana and Texas.