Diversified Energy (DEC.US) is rumored to be close to buying Birch for $1.7 billion, and the wave of oil and gas mergers and acquisitions continues to heat up

The Zhitong Finance App learned that, according to reports, Diversified Energy (DEC.US) is in in-depth negotiations to acquire Birch Resources, an oil and gas company supported by Elliott Investment Management. The transaction amount is expected to exceed 1.7 billion US dollars in cash.

Birch Resources has core assets in America's largest oil field, the Permian Basin. People familiar with the matter said the deal could be officially announced within a few weeks, and Diversified Energy is expected to win the bidding process.

The deal will bring Elliot a sizable return. In 2018, Elliot and other investors jointly acquired Birch's assets from Los Angeles oil and gas company Breitburn Energy Partners. Breitburn went bankrupt during a sharp drop in oil prices. As its creditor, Elliott used this status with other investors to gain control of its core assets in the Permian Basin.

This negotiation comes at a time when oil and gas prices are soaring, and the sharp rise in oil and gas prices has also triggered a boom in industry acquisitions. For Diversified Energy, if the deal is reached, it will further strengthen its layout in the Permian Basin. The company acquired Maverick Natural Resources for $1.3 billion last year, and reached a $1.2 billion agreement with Carlyle Group in May of this year to acquire Camino Natural Resources, which operates in Oklahoma.

The deal will also be the latest in a series of recent oil and gas mergers and acquisitions. In July of this year, Magnolia Oil & Gas (MGY.US) agreed to acquire WildFire Energy LLC for approximately US$4.1 billion (including debt); Matador Resources (MTDR.US) agreed to buy Permian Basin assets from EnCap Investments LP for approximately US$1.3 billion.