Located in northwest Louisiana and east Texas, the assets currently produce 16MBoepd
Diversified Gas & Oil has conditionally agreed to acquire certain upstream assets and associated facilities in the Cotton Valley, US from Indigo Minerals for $135m.
The acquisition includes producing areas located within the Cotton Valley/Haynesville producing area of northwest Louisiana and east Texas.
Currently, the acquired assets have a production of about 16 thousand barrels of oil equivalents per day (MBoepd) coming from nearly 780 net operated wells.
According to Diversified Gas & Oil, the acquired acreage has proved-developed-producing (PDP) reserves of around 50 million barrels of oil equivalent (MMBoe).
The company said that it has been actively assessing a range of regions as its first step outside of Appalachia Basin. The acquisition marks its foray into a new regional focus area (RFA) which includes producing areas located within Louisiana, Texas, Arkansas, and Oklahoma.
Diversified Gas & Oil said that the RFA benefits from a friendly regulatory environment and mature infrastructure, which complement its low-cost operating profile.
Diversified Gas & Oil CEO Rusty Hutson, Jr. said: “Our new regional focus area covers a multi-state area in a similar size footprint to Appalachia, and meets our expansion criteria in terms of asset quality, infrastructure, market dynamics, opportunity set and supportive regulatory environment.
“This first strategic acquisition outside of Appalachia also reflects our continued commitment to a consistent asset profile and valuation while affording us expanded value-accretive roll-up opportunities in this new region that will enable us to quickly build scale and drive efficiencies.”
The deal, which will be subject to customary diligence, reviews, and approvals, is expected to close in the second half of this month.
Diversified Gas & Oil said that it will continue to study other acquisition opportunities, both within and outside of the Appalachian Basin.
The company said that it will particularly focus on opportunities that are in line with the parameters of the participation agreement signed with funds managed by Oaktree Capital Management last October. These include a purchase price threshold of more than $250m.