Diversified Energy Pays $1.8 Billion for Elliott's Permian Gas Assets
The deal adds 68,000 boepd of proved production and 1.17 trillion cubic feet equivalent of reserves, backed by a $10 billion Carlyle acquisition partnership.
Diversified Energy Co agreed on Thursday (2026-09-03) to pay around $1.8 billion for Birch Permian Holdings Inc, a package of Permian Basin producing assets held by affiliates of Elliott Investment Management, in a transaction supported by an expanded acquisition partnership with Carlyle Group.5
The assets produce roughly 68,000 barrels of oil equivalent per day, with natural gas accounting for 30 percent of output and natural gas liquids a further 32 percent, Rigzone reported. Proven reserves stand at approximately 1.17 trillion cubic feet equivalent. That gas-and-liquids weighting sets this apart from the crude-focused Permian transactions that have dominated deal flow in recent years.5
Diversified plans to fund most of the purchase through an asset-backed securitization of approximately $1.5 billion, structured through Carlyle's asset-backed finance and capital markets teams alongside other customary financing. Simultaneously, the Carlyle partnership was expanded to jointly pursue up to $10 billion in proved-developed-producing acquisitions, five times the $2 billion programme the two companies announced on June 23, 2025.5
NYMEX Henry Hub front-month gas was at $2.96 per MMBtu on Thursday (2026-09-03), up 1.72 percent on the day but still below $3. Acquiring proved-producing wells under ABS financing locks in cash-flow assumptions without the price-deck risks that undeveloped acreage requires.5
The Permian's gas output trajectory provides the supply context. EIA data show Permian marketed gas production grew from 17.2 billion cubic feet per day in 2021 to 27.6 Bcf/d by 2025, a 60 percent increase that outpaced the 39 percent crude oil growth recorded over the same period.2 The EIA Short-Term Energy Outlook forecast Permian gas production averaging 29.2 Bcf/d in 2026, 6 percent above 2025, with the increase driven mainly by associated gas from crude extraction. EIA also forecast Permian gas output growing 10 percent year-on-year in 2027, contingent on infrastructure constraints easing later in 2026.1,4
The midstream package attached to the deal reflects those volumes. The assets include 12 primary central processing facilities with combined capacity of 345,000 barrels per day and 310 million cubic feet per day of gas, nine gathering facilities, and more than 60 miles of gathering pipeline.5 Owning that infrastructure reduces Diversified's reliance on third-party takeaway, which has periodically pressured Permian gas realizations when pipeline capacity tightened.
Nationally, the supply picture continues to expand. The EIA's August 2026 Short-Term Energy Outlook forecast U.S. marketed gas production averaging 122.5 Bcf/d in 2026, which would surpass the previous record of 118.5 Bcf/d set in 2025. Lower 48 marketed production averaged 117.2 Bcf/d in the first quarter of 2026, a 4 percent gain over the year-earlier quarter, with the Permian driving the largest share of incremental growth.3,1
Diversified's model is built on proved-developed-producing assets rather than exploratory acreage. Wells already in production deliver immediate cash flow with no drilling budget to defend. In a market where NYMEX Henry Hub front-month has stayed below $3, that carries more weight than reservoir upside.5
But the ABS structure introduces its own condition. Asset-backed securitization of upstream reserves works when production holds within modeled decline curves. Permian associated gas output moves with oil drilling, which moves with crude prices. ICE Brent crude front-month stood at $96.01 per barrel and WTI front-month at $91.88 per barrel, both on Thursday (2026-09-03), prices that currently support continued Permian drilling activity. A sustained crude-price fall that cuts rig counts would reduce associated gas volumes and compress the cash flows backing the securitization.5
The practical test is throughput utilization across those 12 central processing facilities. EIA's 29.2 Bcf/d Permian forecast for 2026 already accounts for infrastructure constraints that limited flow earlier in the year. If those bottlenecks ease in the second half of 2026, the 310 MMcf/d of gas processing capacity that Diversified has just acquired would run closer to nameplate — the margin between actual and nameplate utilization is where the deal either earns its price or does not.4,5