United States securities and exchange commission logo
September 22, 2022
Benjamin Sullivan
Executive Vice President, General Counsel and Corporate Secretary
Diversified Energy Co PLC
1600 Corporate Drive
Birmingham, Alabama 35242
Re: Diversified Energy
Company plc
Amendment No. 2 to
Draft Registration Statement on Form F-1
Submitted September
2, 2022
CIK No. 0001922446
Dear Mr. Sullivan:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
August 16, 2022 letter.
Amendment No. 2 to Draft Registration Statement on Form F-1
Prospectus Summary
Recent Developments, page 11
1. With regard to your
announced acquisition of certain upstream assets in the Central
Region, we note your
statement that "Based on our management's estimates of PDP
reserves and NYMEX
strip pricing, the purchase price represents an approximately PV17
valuation." Please
revise your disclosure to explain the meaning of a "purchase price that
represents an
approximately PV17 valuation" in plain English.
2. You disclose that in
August, you amended and restated the credit agreement governing
Benjamin Sullivan
FirstName
DiversifiedLastNameBenjamin Sullivan
Energy Co PLC
Comapany 22,
September NameDiversified
2022 Energy Co PLC
September
Page 2 22, 2022 Page 2
FirstName LastName
your Credit Facility by entering into the Amended and Restated
Revolving Credit
Agreement, dated as of August 2, 2022. You further disclose that the
amendment
enhances the alignment with your stated ESG initiatives by including
sustainability
performance targets similar to those included in the ABS V Notes. We
note a press release
on your website that lists three sustainability-linked performance
targets ("SPTs") related
to this credit agreement: Greenhouse gas emissions (GHG) intensity
reduction targets
(Scope 1 & 2); Asset Retirement targets above current levels; and
Safety-related
performance targeting a decrease in Total Recordable Incident Rate
("TRIR"). Please
disclose the SPTs you are to achieve, the measurement period, and any
financial and/or
structural characteristics of your credit agreement that vary
depending on whether achieve
your SPTs. Please also disclose whether you or a third-party will
assess your performance
and confirm that any such assessment will be made publicly available.
Summary Consolidated Financial and Other Data
Total Operating Cost per Boe, page 20
3. We note the revision you made in response to prior comment 2. Based on
the presentation
on page 20, it appears that further revision to the title of the
non-IFRS measure is
necessary as the calculation results in a Total Adjusted Operating
Cost per Boe.
Liquidity and Capital Resources
Debt, page 82
4. We note your disclosure on pages 83-85 that based on whether certain
performance
metrics are achieved, each of ABS I, ABS II, ABS III, ABS IV and ABS V
are required to
apply up to 100% of excess cash flow to pay down additional principal,
with the
remaining proceeds remaining with you. Please disclose these
performance metrics, and
explain the criteria or process that determines what level of excess
cash you will be
required to use to pay down additional principal, and how often or at
what interval such
performance metrics will be assessed and whether you or a third-party
will assess your
performance and whether any such assessment would be publicly
available.
5. You disclose that in connection with the issuance of the ABS III and
ABS IV Notes, you
retained an independent international provider of ESG research and
services to provide
and maintain a sustainability score with respect to Diversified
Energy Company plc and
to the extent such score is below that which was received at the
initial issuance of the ABS
III and ABS IV Notes as of any determination date, the interest
payable with respect to the
subsequent interest accrual period will increase by five basis points.
Please also discuss
what is a "determination" date and explain how often your
sustainability score" will be
updated with the possibility to increase your interest payable. Please
also disclose where
your sustainability score" and any updates to such score will be
made publicly available
for investors to evaluate.
6. We note disclosure of a second party opinion received from a
third-party that certified the
terms of the ABS V Notes as being aligned with the framework for
sustainability-linked
Benjamin Sullivan
Diversified Energy Co PLC
September 22, 2022
Page 3
bonds of the International Capital Markets Association ( ICMA"). You
further disclose,
among other items, the selection of key performance indicators ( KPIs
), (2) the
calibration of SPTs, (3) variation of bond characteristics depending on
whether the KPIs
meet the SPTs, and (4) regular reporting of the status of the KPIs and
whether SPTs have
been met. In terms of sustainability performance targets that you must
achieve, you
disclose that you must achieve, and have certified by April 28, 2027 (1)
a reduction in
Scope 1 and Scope 2 greenhouse gas emissions intensity to 2.85 metric
tons of carbon
dioxide equivalent per million cubic feet of natural gas equivalent (
MT CO2e/MMcfe )
and/or (2) a reduction in Scope 1 methane emissions intensity to 1.12 MT
CO2e/MMcfe.
For each SPT that you fail to meet, or have certified by an external
verifier that you have
met, by April 28, 2027, you disclose that the interest rate payable with
respect to the ABS
V Notes will be increased by 25 basis points. Please revise to define
"SPT." Please also
disclose where you intend to make publicly available for investors to
evaluate the regular
reporting of the status of your KPIs and whether your SPT's have been
met.
Additionally, please disclose where your second party opinion is publicly
available, and
confirm that the ultimate independent verification of SPT performance by
an external
reviewer will be made publicly available.
You may contact Jennifer O'Brien, Staff Accountant, at 202-551-3721 or
Shannon
Buskirk, Staff Accountant, at 202-551-3717 if you have questions regarding
comments on the
financial statements and related matters. You may contact Sandra Wall,
Petroleum Engineer, at
202-551-4727 or John Hodgin, Petroleum Engineer, at 202-551-3699 with questions
about
engineering comments. Please contact Irene Barberena-Meissner, Staff Attorney,
at 202-551-
6548 or Kevin Dougherty, Staff Attorney, at 202-551-3271 with any other
questions.
Sincerely,
FirstName LastNameBenjamin Sullivan
Division of
Corporation Finance
Comapany NameDiversified Energy Co PLC
Office of Energy &
Transportation
September 22, 2022 Page 3
cc: Ryan J. Lynch, Esq.
FirstName LastName