Diversified Energy's $1.8 Billion Birch Permian Buy From Elliott Transforms Four-Basin US Operator

Diversified Energy Company agreed to acquire Birch Permian Holdings for approximately $1.8 billion from affiliates of Elliott Investment Management, the company's largest deal in a 25-year operating history. The transaction, announced September 2, adds 68,000 barrels of oil equivalent per day of net production and is expected to close in the fourth quarter of 2026. Financing comes primarily from a $1.5 billion asset-backed securitization structured with The Carlyle Group. WTI crude settled at $100.05 per barrel on Friday's CME close, its first finish above $100 per barrel in months, framing the deal's commodity economics.

Birch Permian: Production and Infrastructure

Birch's producing portfolio spans approximately 46,000 net mineral acres in the core Permian Basin, with 480 net wells across roughly 500 gross locations. Production divides as 38% oil, 32% natural gas liquids, and 30% natural gas, with a lease net revenue interest averaging 77%. About 75% of wells came online in 2022 or earlier, giving the portfolio the long-life, low-decline character Diversified targets in every acquisition. Proved reserves total approximately 1,168 billion cubic feet equivalent, with a PV-10 value of roughly $2.0 billion, per the September 2 press release.

Midstream infrastructure transfers to Diversified at close alongside the producing wells. The package includes 12 central processing facilities with 345,000 barrels per day of gross capacity, 310 million cubic feet per day of gas processing, and more than 60 miles of gathering pipelines. Five water disposal facilities and 80 miles of water infrastructure complete the asset transfer, with 96% of wells operated by Birch giving Diversified full control from day one.

Valuation Analysis: $26,470 Per Flowing Barrel

At $1.8 billion for 68,000 boe/d of flowing production, Diversified is paying approximately $26,470 per daily barrel of oil equivalent, an Oil Authority calculation from the deal's announced terms. That metric sits below the $35,000 to $70,000 per flowing barrel paid in major Permian upstream acquisitions from 2021 to 2023, reflecting Birch's PDP-only profile. Diversified's press release puts the valuation at 3.3 times Adjusted EBITDA and roughly 90 cents on the $2.0 billion PV-10.

The deal adds approximately $548 million in annualized Adjusted EBITDA, per Diversified's projections. Diversified's Permian segment EBITDA grows from $64 million to $612 million post-close, accounting for nearly all of that gain. Combined gross volumes under Diversified's operational control reach approximately 2.5 billion cubic feet equivalent per day, or about 1.6 Bcfepd net. CEO Rusty Hutson Jr. said the acquisition "will establish Diversified as a scaled operator in the nation's most important oil-producing basin."

Elliott's Exit and the PE Seller Calculus

Birch Permian Holdings is a private equity platform assembled and operated by affiliates of Elliott Investment Management, a multi-strategy investment firm known for activist positions across equities, credit, and real assets. Elliott built Birch as a standalone Permian operator and chose to exit with WTI above $100 per barrel and proved reserves fully booked. PE-to-operator exits accelerated through 2026 as commodity prices reached multi-year highs, letting private equity sponsors realize returns from Permian platforms.

Diversified Energy, listed on the NYSE and the London Stock Exchange under the ticker DEC, built its US position primarily through Appalachian Basin natural gas acquisitions before expanding to the Permian and Anadarko basins. The Birch deal marks its entry into the Permian at scale, complementing existing operations across four US basins. Diversified's business model targets long-life, low-decline producing assets, generating free cash flow rather than pursuing new drilling programs.

Carlyle Partnership Deploys $2.975 Billion in Four Months

Diversified will fund the acquisition primarily through a $1.5 billion asset-backed securitization on the Birch PDP assets, arranged through Carlyle's Asset-Backed Finance and Capital Markets teams. The ABS structure lets Diversified avoid a large equity raise, pledging the Birch producing assets as collateral instead. This marks the second transaction under the Carlyle-Diversified strategic partnership; the first was a $1.175 billion acquisition of Camino Natural Resources in the Anadarko Basin, closed in May 2026. Combined, the two deals have deployed $2.975 billion of the $10 billion framework in under four months.

Carlyle and Diversified expanded their original $2 billion collaboration at the Birch announcement, raising the combined target to $10 billion in potential PDP acquisitions. At the Birch pace of roughly $1.8 billion per deal, the remaining $7.025 billion of capacity implies three to four additional transactions before the framework is exhausted. Peel Hunt rates DEC shares a buy with a 3,000 pence target, projecting pro forma free cash flow of $895 million annually once Birch closes.

Market Context: Brent at $104.26, WTI Above $100

Brent crude settled at $104.26 per barrel on Friday's ICE close, while WTI settled at $100.05 per barrel on CME. Both benchmarks posted their largest weekly advances in months, with WTI rising $8.57 per barrel, or 9.4%, over the five sessions ended September 11, 2026. WTI above $100 per barrel supports the deal's 3.3-times EBITDA acquisition multiple and the $1.5 billion ABS debt service. Tennyson Securities maintains a 2,000 pence target on DEC shares, reflecting different assumptions about post-close leverage from Peel Hunt's 3,000 pence view.

The acquisition is subject to customary regulatory approvals and is expected to close in the fourth quarter of 2026. Post-close, Diversified will hold combined net volumes of approximately 1.6 billion cubic feet equivalent per day across four US basins.