Diversified Energy has agreed to acquire Birch Permian Holdings and certain affiliated companies for approximately $1.8 billion, significantly expanding its position in the Permian Basin.
Birch is being acquired from affiliates of Elliott Investment Management. Diversified expects the transaction to increase its production by approximately 35% and adjusted EBITDA by approximately 55%.
The transaction will primarily be financed through an approximately $1.5 billion privately rated asset-backed securitization originated and structured by Carlyle, along with other financing sources including liquidity under Diversified’s revolving credit facility.
The acquisition is expected to close during the fourth quarter of 2026, subject to regulatory approvals and other customary conditions. The agreement includes a $50 million break fee.
Diversified and Carlyle are also expanding their strategic partnership from an original $2 billion framework to pursue as much as $10 billion of potential proved developed producing asset acquisitions over time, subject to mutual agreement and transaction-specific approvals.
Birch currently produces approximately 68,000 barrels of oil equivalent per day and has estimated annualized adjusted EBITDA of approximately $548 million.
The assets include approximately 46,000 net mineral acres, 500 gross operated wells and an integrated midstream footprint with gathering, processing and water infrastructure. Diversified estimates the acquired operations generate approximately 80% EBITDA margins.
The deal will establish a larger operated position for Diversified in the Permian and provide a platform for additional consolidation of mature producing assets.
Support: Gibson Dunn is serving as legal advisor to Diversified, while Truist Securities, KeyBanc Capital Markets and Citigroup are serving as lead financial advisors. Moelis is financial advisor to Birch, and Akin Gump is serving as its legal advisor.
KEY QUOTES:
“I am thrilled to announce the acquisition of Birch, a premier Permian Basin operator that represents an important milestone in Diversified’s evolution and long-term growth strategy. This $1.8 billion acquisition is our largest in the Company’s 25-year history. Birch has assembled one of the highest-quality operated asset positions, combining a concentrated footprint in the core of the Permian, substantial production scale, integrated infrastructure, and a track record of delivering predictable, high-margin cash flows. These assets align exceptionally well with our disciplined approach to acquiring and optimizing long-life energy assets and provide a compelling platform for future value creation for our shareholders.
This transaction will establish Diversified as a scaled operator in the nation’s most important oil-producing basin and creates a strategic position from which we can pursue future consolidation opportunities across the Permian Basin. The acquisition is expected to add approximately 68 Mboepd of production, further strengthening our position as a significant operator and marketer of oil and natural gas in the United States, with ever expanding commercial opportunities led by our in-house marketing organization. We believe Diversified’s operational expertise, Smarter Asset Management, and Portfolio Optimization Program can further unlock value across this asset base while maintaining the disciplined capital allocation framework that has defined our success.
For 25 years, Diversified has consistently proven our ability to acquire, optimize, and responsibly manage energy assets to create durable shareholder value. As North American resource development matures, we see significant opportunities emerging around long-life PDP assets and infrastructure-rich operated positions. Birch represents a perfect asset base for our focused and proven business model, providing immediate scale, strong cash returns, and a foundation for continued growth in the Permian for many years to come.”
Rusty Hutson, Jr., Chairman and CEO of Diversified Energy
