PITTSBURGH – A Reed Smith energy transactions team led by partners Ryan Purpura and Ryan Haddad has successfully advised Diversified Energy Company PLC (DEC) in its $250 million acquisition of several high-quality accretive energy properties and related assets in East Texas. DEC, based in Birmingham, Ala., acquired the assets from Tanos Exploration, an oil and natural gas drilling company based in Tyler, Texas.
Oil refinery at night

The deal adds more than 17,000 barrels of oil-equivalent production per day to the client’s existing portfolio, plus an estimated 25 million barrels of proved developed producing (PDP) reserves. Furthermore, the purchase provides DEC with substantial upside potential with the addition of some 50 undeveloped well locations throughout the region with a potential $280 million in untapped reserves.

Additionally, DEC acquired a basket of hedge arrangements, including a guaranteed average gas price-floor for 60% of the acquired PDP production of US$3.80 per thousand cubic feet (Mcf) during calendar year 2023.

“Adding these reserves with a foundation of hedge protection allows the client to get a jump on its asset-optimization while adding to its hedge portfolio, and this helps build long-term value for shareholders, as well,” said Purpura, who, like Haddad, is a partner in the firm’s global Energy and Natural Resources Group concentrating on M&A and other transactions in the energy and commodities industry.

The purchase was funded in part by the client’s proceeds from a recent $163 million equity financing.

Owing to the complex nature of the deal, plus hedge protections and related financing, Purpura and Haddad assembled an experienced, multidisciplinary team of Reed Smith colleagues that included partners Robert Phillpott and Luke Burns and associate Simone Senior. Reed Smith worked closely on the deal with DEC’s talented team of in-house counsel led by Benjamin Sullivan, executive vice president and general counsel; Michelle Matthews, associate general counsel and assistant corporate secretary; and James Adkins, associate general counsel for A&D/corporate.