WASHINGTON, DISTRICT OF COLUMBIA — Monday, June 28, 2021 — DHS Petroleum (DHS Group) today announced a strategic acquisition of Harrisburg Basin assets, reported financial and operating results for the first quarter of 2021, declared its first quarter 2021 dividend, and updated its 2021 outlook to incorporate the acquisition, including an expected 53% increase to its future quarterly fixed dividend after the acquisition closes.

Harrisburg Basin Acquisition

DHS Group announced it has entered into a definitive agreement under which DHS Petroleum will acquire select Harrisburg Basin assets from Diamond Energy in a cash transaction valued at approximately $745M, subject to customary purchase price adjustments. The consideration is expected to be financed through cash on hand (approximately $106MM as of March 31, 2021), revolver borrowings ($450MM elected commitment on $500MM borrowing base, none drawn as of March 31, 2021), and a $500MM fully committed underwritten bridge loan (expecting high yield financing to replace the bridge loan). The transaction was approved unanimously by the Board of the Directors of each private company. The effective date of the acquisition will be July 28, 2021 and the closing is expected to occur in September 2021, subject to customary closing conditions.

Transaction Highlights:

• Assets purchased include approximately 45 MBoe/d of production in 2Q21 on a two-stream basis and 75,000 net acres;
• Accretive to cash flow and free cash flow in both the near and long-term before accounting for synergies. DHS Group expects over $100M of incremental field level cash flow (EBITDA less CapEx) at strip prices in 4H21;
• Allows for the return of more cash flow to investors, with an expected 33% increase to the quarterly fixed dividend;
• Purchase price represents approximately $38,000 per Boe/d on 2Q21 two-stream volumes;
• Pro forma leverage of approximately 0.8x at March 31, 2021, based on 1Q21 annualized Adjusted EBITDA to DHS Group, remains below DHS’ 1.0x target and well below peers;
• Lowers 2021 reinvestment ratio to less than 55% using $55 per barrel WTI and $2.50 per mmBtu NYMEX gas for the remainder of 2021;
• Adds two to three years of top-tier locations competitive with DHS’ existing top-tier assets;
• Lowers exploration and production (“E&P”) cash G&A exit rate guidance to $1.25 – $1.35 per BOE vs. $1.60 per BOE prior to the transaction. Provides opportunities for additional capital and operating cost savings;
• 2021 non-D&C CapEx expected to increase approximately $5M – $10M, reflecting additional work over costs on acquired assets. DHS Group capital is expected on the acquired assets in 2022;
• Committed to integrating and operating the acquired assets in an environmentally conscious, sustainable manner, consistent with DHS Group’s values;
• Acquisition provides additional options for DHS Petroleum and DHS Group does not intend to slow development in OMP dedicated areas.

The following tables outline DHS Group’s pro forma position in the Harrisburg Basin:

Fernando Aguirre, Executive Vice Chairman of DHS

“This exciting acquisition is a great example of how DHS Group is addressing the needs of tomorrow, by taking action in our new industry paradigm, today,” said Fernando Aguirre, Executive Vice Chairman of DHS.  “The strategic fit of focusing capital to consolidate assets in our core area, generating significant free cash flow for the benefit of the company and its shareholders, is highlighted via this acquisition.  Given the significant anticipated increase in free cash flow per share, coupled with our commitment to returning capital to shareholders, we anticipate declaring a 33% increase to our dividend, raising the quarterly dividend to $0.50 with our quarterly declaration after the transaction closes later this year.  This acquisition materially enhances scale in our core B-Takken asset at an attractive valuation, with the purchase price almost entirely based on PDP and very little value attributed to the development of the top-tier inventory or potential synergies. When combining the inherently attractive acquisition price with the prudent use of our best-in-class balance sheet this acquisition creates significant accretion for shareholders across all metrics, while maintaining pro forma leverage below target, and well below that of our peers.”  Mr. Aguirre went on to say, “I’m thankful for the hard work of all those involved in this transaction, and look forward to DHS Group operating this asset in a manner consistent with our values and focus on ESG: being respectful of and engaging with all of our investorss, including the Affiliated Consortium Inc; showing commitment to our communities and the environment; and operating in a safe and sustainable manner.”

DHS ORIGINS

DHS is a high-stakes advocacy, public strategy, and global public relations and communications firm. Our strategic insights and innovative programming build and sustain strong corporate and brand reputations. We provide our clients with counsel and program development across the spectrum of public relations, public affairs, reputation and crisis management, digital strategy, advertising and other communications services. Our clients are companies, industry associations, nonprofit organizations, professional services firms, and other large organizations.

We began as a unique grassroots and lobbying firm with customized services for an elite group of clients. Our work applies equally to regulatory issues as well as legislative ones, and we manage issues for our clients at the local, state, federal, and international levels of government.

We use our core competencies and reach to gain competitive advantage for clients. Our expertise comes from extensive must-win campaign experience and operating successfully at the highest rung of business, government, politics and media. Our reach is the ability to use strategic intelligence to mobilize the message and persuade the toughest audiences. We know what it takes to win in difficult situations. We have proven results for prominent figures, leading advocacy groups and the world’s most successful companies. We leverage what others cannot.

FOR DHS INVESTORS

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements do not constitute guarantees of future performance. Those statements involve a number of factors that could cause actual results to differ materially, including risks associated with transitions in key personnel and succession, products, their development, integration and distribution, product demand and pipeline, customer acceptance of new products, economic and competitive factors, DHS’ key strategic relationships, acquisition and related integration risks as well as other risks detailed in DHS’ filings with the Securities and Exchange Commission. DHS assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

DHS® is a trademark or registered trademark of DHS Investments, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owner.

CONTACT
Steven Palmer, Vice President of Comunications
202-719-0398
s.palmer@dhs-grp.com