Diversified Energy Company is in advanced discussions to purchase Birch Resources, an oil and gas company supported by Elliott Investment Management, for over $1.7 billion in cash. This potential acquisition would bolster Diversified Energy's operations in the Permian Basin, a major oil-producing region in the United States.
The deal, which could be announced in the coming weeks, sees Diversified Energy emerging as the likely winner in a competitive sale process. However, sources familiar with the negotiations cautioned that the discussions are still ongoing and could fall through, another buyer could emerge, or the timing could shift. Diversified Energy confirmed preliminary discussions in an SEC filing, noting they are at an early stage and an agreement is not certain.
This acquisition would further Diversified Energy's expansion strategy, following its $1.3 billion purchase of Maverick Natural Resources last year, which also increased its Permian Basin footprint. Additionally, in May, Diversified Energy partnered with Carlyle to acquire Anadarko Basin assets from Camino Natural Resources for $1.175 billion. The potential $1.7 billion Birch deal would surpass these previous acquisitions, reinforcing Diversified Energy's growth through asset purchases.
For Elliott Investment Management, the sale would represent a significant return on investment. Elliott and other investors capitalized Birch's assets with approximately $775 million in 2018, after acquiring them from Breitburn Energy Partners, which had faced financial difficulties. This transaction highlights Elliott's strategy of investing in distressed companies or assets and seeking an exit when market conditions improve. The deal also reflects a broader trend of consolidation and acquisitions in the oil and gas sector.
