KeyBank committed to providing a new $500 million five-year senior secured revolving credit facility to Diversified Gas & Oil, a U.S.-based acquirer and operator of oil and gas producing assets.

The new KeyBank facility will have an initial borrowing limit of $140 million in conjunction with the acquisition of Alliance Petroleum Corporation and increase to $200 million following acquisition closing of certain CNX Resources assets.

The revolver follows the successful completion of Diversified’s $189 million share placing, following the shareholders’ general meeting held February 19, 2018 in London, and is the fulfilment of the company’s commitment to reduce its cost of debt and to maintain a progressive dividend policy.

Diversified will make an initial draw on the revolver to refinance the outstanding balance on its existing term loan facility. This refinancing will significantly reduce the company’s interest expense as the new facility will have an initial interest rate of LIBOR + 2.50% versus the term loan’s interest rate of LIBOR + 8.25%. The interest rate on the revolver will be subject to a grid that fluctuates based upon utilization from a pricing of LIBOR + 2.25% to 3.25%.

In addition to the refinancing of the term loan, Diversified intends to utilize the revolver for general corporate purposes, including the option to finance all or a portion of any future acquisition opportunities.

Under the terms of the facility, KeyBank is entitled to syndicate with other financial institutions, though the previously discussed borrowing bases are not contingent upon such syndication.

Diversified anticipates that the facility will be in final agreed form, approved and signed by March 15, 2018.