Warren well-plugging company is acquired
WARREN — Diversified Energy Co., a Birmingham, Ala.-based owner / operator of natural gas and oil wells mostly in the Appalachian basin of the U.S., has acquired a well plugging company in Warren.
The transaction to purchase Nick’s Well Plugging LLC on North River Road finalized earlier this month for an undisclosed amount.
Founded in 2010 by Orville “Nick” Nicholas after a 30-year career with Haliburton with his son, Jason, and daughter, Tammy Angus, Nick’s Well Plugging has been a third-party retirement service for Diversified Energy for three to four years, plugging as many as 20 wells a year for the company in Ohio, said Bray Gray, Diversified Energy’s executive vice president and chief operating officer.
The acquisition marks the second independent well retirement company for Diversified Energy this year. The other was Next LVL Energy in Pennsylvania.
Nick’s Well Plugging will become part of Next LVL Energy, a wholly-owned subsidiary of Diversified, including the company’s 14 employees and equipment. Jason Nicholas and Angus will shift to Next LVL, and Nick Nicholas will serve as a consultant during the transition period, according to Diversified.
“They had done outstanding work for us, just quality, a quality company. The Nicholas family — a lot of integrity, very good to work with, so as we started looking across the landscape of companies that we were interested in bringing a part of our growth plans, Nick’s was one we knew we had a relationship with. We were confident in their capabilities, their equipment, so we were very pleased when Jason Nicholas and his sister Tammy decided to accept our offer and join our team,” Gray said.
With the addition of Nick’s Well Plugging’s two crews, Diversified Energy has eight internal well retirement crews and plans a ninth by the end of the second quarter in June. That, according to the company, positions it to meet or exceed its target of 200 well retirements a year in Appalachia by 2023.
The company owns / operates about 6,500 wells north to south in eastern Ohio. It also operates in Tennessee, Kentucky, Virginia, West Virginia and Pennsylvania, and last year expanded operations into Louisiana, Oklahoma and Texas.
Diversified Energy is focused on natural gas and crude oil production, but isn’t a development or drilling company. Rather, it acquires existing producing wells “where there is predictability, visibility into what the production looks like and predictable cash flows,” Gray said.
Gray said the company has been able to consolidate the vast majority of conventional production assets in the Appalachian region in the last five years. It also has acquired unconventional wells and owns about 17,000 miles of midstream and gathering pipeline across West Virginia and eastern Kentucky.