Canvas Energy Acquisition Bolsters Diversified Energy's Production Footprint and Strategic Reach

Diversified Energy Company (DEC) has successfully finalized its landmark acquisition of Canvas Energy, a transformative deal that substantially expands both its operational capacity and asset portfolio. The transaction, underwrit­ten through a $400 million asset-backed securitization structure, represents a calculated strategic advance positioning the Birmingham-based producer for sustained growth in the natural gas and liquids sector.

The Acquisition’s Scale and Immediate Impact

The Canvas Energy assets bring meaningful production uplift to Diversified’s operational base. The newly acquired properties generate approximately 147 million cubic feet equivalent of natural gas daily, translating into roughly a 13% increase in the company’s standalone production volumes. This quantum leap in output demonstrates the substantial nature of the transaction and its immediate contribution to DEC’s production profile.

Beyond production metrics, the deal extends Diversified’s footprint through the acquisition of nearly 1.6 million net acres across Central Oklahoma. This geographic consolidation is particularly valuable, as it creates operational synergies and optimization opportunities that extend beyond simple asset aggregation. The overlapping acreage holdings reduce operational fragmentation and unlock potential for improved capital efficiency.

Financial Architecture and Valuation Metrics

The $550 million purchase price positions the assets at an approximately 3.5 times multiple of anticipated next-twelve-month EBITDA, reflecting a disciplined acquisition approach. Diversified’s funding mechanism—a privately rated master-trust ABS structure supported by Carlyle-managed investment vehicles—underscores the company’s ability to access capital markets while maintaining financial prudence.

The ABS XI issuance secured $400 million across multiple tranches, with the investment-grade A-rated portion carrying a blended coupon of 5.97%. This funding approach allows DEC to grow its asset base without compromising balance sheet flexibility, a critical consideration in the cyclical energy sector.

Shareholder Structure and Voting Framework

To complete the transaction, Diversified issued 3,720,125 new common shares to Canvas Energy’s former equity holders. These shares, traded on the New York Stock Exchange, carry identical rights and privileges as DEC’s existing stock. Following the issuance, Diversified’s fully-diluted share count reached 80.4 million shares outstanding as of November 24, 2025, with each share representing one voting right.

Strategic Positioning in Energy Markets

The acquisition reinforces Diversified Energy’s positioning as a diversified producer with integrated operations spanning natural gas and liquids production, midstream transportation, marketing, and well abandonment services. By expanding its asset base and geographic concentration, the company enhances its competitive resilience and optionality for long-term value creation. The deal illustrates how strategic M&A remains a viable pathway for energy companies seeking to achieve scale efficiencies and operational leverage in an evolving market landscape.