Diversified Energy closes ESG-aligned asset-backed securitisation of Oklahoma assets

Independent energy company Diversified Energy said on Monday that both it and Oaktree Capital Management had jointly closed an ESG-aligned asset-backed securitisation of certain co-owned producing natural gas and oil assets located in Oklahoma.

Diversified Energy stated that its agreement with Oaktree, its fourth ESG-aligned financing in 2022, was linked to key performance indicators based on emissions reduction targets.

The FTSE 250-listed group had previously pledged its portion of the assets as collateral under its sustainability-linked Loan.

Diversified added that it will use its ABS proceeds of $215.0m to repay all outstanding borrowings under its SLL and for general corporate purposes, resulting in a current liquidity position of approximately $300.0m.

Chief executive Rusty Hutson Jr said: "With four successful ABS transactions this year, collectively for more than $1.1 billion at a 5.7% weighted-average interest rate, we continue to demonstrate our access to competitively financing high-quality assets amidst a challenging capital markets backdrop, volatile commodity prices, and rising interest rates.

"With its fully-amortising and investment-grade fixed-interest rate structure, the ABS product remains an attractive financing tool that insulates us from higher interest rates, avoids bullet maturities and systematically reduce our borrowings as we align the cash profile of our business with institutions seeking to invest in a long-life cash flow stream backed by high-quality assets."

As of 0805 BST, Diversified Energy shares were up 1.04% at 126.40p.

Reporting by Iain Gilbert at Sharecast.com