The Challenge

Diversified Energy Company PLC ("Diversified"), a publicly traded upstream natural gas and oil production company, sought to unlock additional value from its current asset base at an attractive multiple while enhancing liquidity and reducing leverage. An innovative Transaction was pursued, wherein Diversified executed a sale of upstream producing assets in Appalachia (the "Assets") to a Special Purpose Vehicle ("SPV") in which Diversified retained a 20% minority interest and operatorship of the Assets. The Transaction generated proceeds to Diversified of approximately $200 million, comprised of an Asset-Backed Securitization placed at the SPV of $162.0 million and a sale of an 80% equity interest in the SPV for approximately $30 million.

Pre-transaction diligence services and establishing post-transaction support were necessary to execute the Transaction. Leveraging its extensive transaction due diligence experience, energy industry expertise, and unique position as a Fitch-approved backup manager for oil and gas asset-backed securitizations, Opportune LLP was engaged to provide due diligence services to review the oil and gas reserves of the assets being sold, perform agreed-upon review procedures for the financial model supporting the Transaction and be the back-up manager after the closing of the Transaction. Our ability to package these services provided efficiencies and cost savings to Diversified for the Transaction.

The Solution

Before the Transaction closed, Opportune's petroleum engineering firm, Ralph E. Davis Associates, conducted a detailed review of Assets' oil and gas reserves and issued a Technical Diligence Report. This report was made available to potential transaction investors, allowing them to understand the assets better and assist them in their underwriting processes. Additionally, our Transaction Advisory team reviewed the Transaction's financial model and related outputs to confirm the accuracy of calculations and consistency with the governing legal documents (i.e., Indenture). After this review, a report was issued for review by the potential investors to give them greater confidence in the model calculations.

Following the close of the Transaction, Opportune began serving as the named backup manager for the SPV. In this important role, Opportune conducts reviews of the SPV's periodic reporting, including monthly noteholder statements, financial statements, reserve reports, and other reports required by the governing documents. Opportune is prepared to support Diversified or step into their role as asset managers if there are any issues with the repayment of the Transaction notes.