KeyBanc Reiterates Overweight Rating on Diversified Energy Co. (DEC)

KeyBanc analyst Tim Rezvan reiterated an Overweight rating and $17.00 price target on Diversified Energy Co. (NYSE: DEC).

The analyst commented: "Meeting Provides Insight on Carlyle Deal, Cherokee JDA, and Asset Sales; We attended a dinner and field trip with management in Oklahoma City this week. The event was timely, one day after Diversified's news of an ABS funding agreement of up to $2B with the structured credit group of Carlyle. We received incremental details, such as the focus on larger scale deals ($250M or larger) and the structure of the financing arrangement, with Carlyle owning a residual equity interest in the ABS. We learned about the MidCon Joint Development Agreement (JDA) with Mewbourne. Management highlighted the attractive drilling economics of the Cherokee Shale – EURs of 1.3 mmboe (50% oil) and AFEs averaging $515/ft. The uptick in industry interest in the MidCon area bodes well for Diversified and the large leasehold position it owns in Oklahoma, which we believe makes the recent cadence of $30M/year of asset sales reasonable, if not conservative, as a go-forward target. We reiterate our OW rating and $17 price target following the trip."

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Shares of Diversified Energy Co. closed at $14.77 yesterday.

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