Diversified Energy reports strong final year-end 2024 results

Diversified Energy Company PLC (LON:DEC; NYSE: DEC) has announced its operational and final audited results for the year ended December 31, 2024.

Diversified remains a differentiated key player in acquiring and building a portfolio of assets through value-accretive transactions while simultaneously unlocking hidden value through its unique operational framework, strategic development partnerships, and growing adjacent business segments, including coal mine methane (CMM), energy marketing and well-retirement. By completing over $4.0 billion of acquisitions since its public listing in 2017, Diversified has built a large-scale integration and operating company that remains focused on delivering de-risked, reliable cash flow for its shareholders. With the combination of maturing assets and M&A activity leading to growth-oriented E&P’s recycling capital through divestment, there remains an ample opportunity set for Diversified’s continued growth. Additionally, with most upstream acquisitions today focusing on increasing undeveloped inventory, Diversified provides a creative and actionable solution as the PDP purchasing partner for those E&P’s that only value inventory.

Only Publicly Traded Champion of the PDP Subsector with Unique Strategic Advantages

Large Operational Scale: Multiple geographies in core basins including Western Anadarko (largest producer), Permian, Appalachia, Barnett and Ark-La-Tex with commodity product diversification
Vertical Integration: In-house marketing, extensive midstream network, wholly-owned processing infrastructure, and a well retirement business segment
Leading Technology Platform: 100% cloud architecture, supporting well level data capture, information for actionable production optimization, and real-time monitoring which mitigates production downtime
Beneficial Financing Solution: Demonstrated ability to access numerous capital solutions, including investment grade, low-cost Asset Backed Securities, commercial banking facilities and equity investment partners
Flexible Capital Allocation: shareholder returns-focused model prioritizing Free Cash Flow for systematic debt reduction, fixed dividend payments, opportunistic share repurchases, and accretive acquisitions
Proven Process to Capture Synergies: established integration playbook and sophisticated corporate infrastructure provides considerable expense savings and unlocks sustainable value

Delivering Consistent and Reliable Results in 2024

Delivered average net daily production: 791 MMcfepd (132 MBoepd)
- December exit rate of 864 MMcfepd (144 MBoepd)
Year end 2024 reserves of 4.5 Tcfe (747 MMBoe; PV10 of $3.3 billion⁽^b⁾)
Total Revenue, inclusive of hedges of $946 million⁽^e⁾, net of $151 million in commodity cash hedge receipts that supplemented Total Revenue of $795 million
Operating Cash Flow of $346 million; Net loss of $87 million, inclusive of $141 million tax-effected, non-cash unsettled derivative fair value adjustments
Adjusted EBITDA of $472 million⁽^c⁾; Adjusted Free Cash Flow of $211 million^(d)
- 2024 Adjusted EBITDA Margin of 51%⁽^c⁾
- 2024 Adjusted Operating Cost per unit of $1.70/Mcfe ($10.22/Boe)

Achieving Expectations

Recommend a final quarterly dividend of $0.29 per share
Generated $49 million of cash proceeds through land sales and Coal Mine Methane Revenues
Retired over $200 million in debt principal through amortizing debt payments
Returned $105 million to shareholders, including $21 million in share buybacks⁽^h⁾
Completed $585 million (gross) in strategic and bolt-on acquisitions during 2024
Retired 202 Diversified wells in Appalachia, marking third consecutive year to exceed 200 wells
OGMP Gold Standard and MSCI AA Rating for third and second consecutive year, respectively
Decreased Scope 1 methane intensity to 0.7 MT CO₂e per MMcfe, a 13% reduction from 2023

Powerful Step Forward

Closed transformative $1.3 billion acquisition of Maverick Natural Resources (“Maverick”)
- Largest Producer in the Western Anadarko Basin (WAB)
- Entry into the Permian basin
- Expecting to achieve over $50 million in annual synergies by year-end 2025
Closed the accretive bolt-on acquisition of assets from Summit Natural Resources
- Anticipate over 300% increase in cash flow from CMM environmental credit sales in the next 24 months
Developed a unique partnership to create an innovative, reliable, net-zero data center power solution
Enhancing free cash flow growth in 2025 by advantageously added natural gas hedges (related to ABS & recent acquisitions) and planning approximately $40 million from the divestiture of undeveloped leasehold during the first half of 2025

Diversified Energy Company CEO Rusty Hutson, Jr. commented:

“Our over 1,600 women and men of Diversified remain the driving force behind our strong operational and financial performance in 2024. Whether it’s natural gas to power the technology of the future or the everyday needs of families and businesses across our operating region, Diversified provides the reliable and sustainable energy needed, and we continue to invest in growing our business while expanding our opportunity set of cash flow generation through verticals in a variety of end markets.

We have built a Company that remains highly focused on long-term value creation through the growth of our platform and our ability to leverage vertical integration and scale to operate a structurally and dependably higher-margin business that delivers de-risked, consistent cash flow. Our focused strategy, disciplined leadership team, sound operating practices, and the strong demand for natural gas provide us with momentum as we begin the year and the confidence to achieve our full-year 2025 expectations while executing against our capital allocation strategy. We are starting the year in a position of strength as a bigger, better business, and there has never been a more exciting time for our Company and the energy industry. We feel privileged to be at the heart of the energy renaissance as the Right Company at the Right Time to help provide essential energy needs.”

Combined Company 2025 Outlook

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Following the recently completed acquisition of Maverick, Diversified expects to realize significant operational synergies associated with a larger, consolidated position in Oklahoma and the ability to improve the overall cost structure of the Maverick Natural Resources assets while continuing to prioritize returns and Free Cash Flow generation.

The following outlook incorporates a nine-month contribution from the recently acquired Maverick.

	2025 Guidance
Total Production (Mmcfe/d)	1,050 to 1,100
% Liquids	~25%
% Natural Gas	~75%
Total Capital Expenditures (millions)	$165 to $185
Adj. EBITDA¹(millions)	$825 to $875
Adj. Free Cash Flow¹(millions)	~$420
Leverage Target	2.0x to 2.5x
Combined Company Synergies (millions)	>$50
¹Includes the value of anticipated cash proceeds for 2025 land sales

Posting of 2024 Annual Report and Notice of Annual General Meeting

Diversified has published to the Company’s website its 2024 Annual Report and Notice of AGM, along with the form of proxy for the AGM. These documents can be viewed or downloaded from Diversified’s website at https://ir.div.energy/financial-info.

The Company has also provided copies of these documents to the National Storage Mechanism that, in accordance with UK Listing Rule 6.4.1R, will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Annual General Meeting Arrangements

The Company’s AGM will be held on April 9, 2025 at 1:00pm BST (8:00am EDT) at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD.

Presentation and Webcast

Diversified Energy Company will host a conference call today at 12:30 pm GMT (8:30am EDT) to discuss these results. The conference call details are as follows:

U.S. (toll-free)	+ 1 877 836 0271
UK (toll-free)	+ 44 (0)800 756 3429
Webcast	https://ir.div.energy/news-events/ir-calendar-events
Replay Information	https://ir.div.energy/financial-info

A corporate presentation has been posted to the Company’s website before the conference call:

DEC 2024 Final Results Presentation Download

Footnotes:

(a)	Corporate decline rate of ~10% calculated as the change in average daily production for the month of December 2023 (775 MMcfepd), adjusted for the impact of acquisitions and divestitures occurring during the 2024 calendar year, to the average daily production for the month of December 2024.
(b)	Based on the Company’s year-end PDP reserves and using 10-year NYMEX strip, as at December 31, 2024.
(c)	Adjusted EBITDA represents earnings before interest, taxes, depletion, and amortization, and includes adjustments for items that are not comparable period-over-period; As presented, Adjusted EBITDA includes the impact of the accounting basis for land sales; Adjusted EBITDA Margin represents Adjusted EBITDA (excluding the adjustment for the accounting basis on land sales) as a percent of Total Revenue, Inclusive of Settled Hedges; For purposes of comparability, Adjusted EBITDA Margin excludes Other Revenue of $16 million and Lease Operating Expense of $19 million in 2024 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy. For more information, please refer to Non-IFRS Measures, below.
(d)	Free Cash Flow represents net cash provided by operating activities less expenditures on natural gas and oil properties and equipment and cash paid for interest; As used herein, Adjusted Free Cash Flow represents Free Cash Flow, plus cash proceeds from undeveloped acreage sales; For more information, please refer to Non-IFRS Measures, below.
(e)	Calculated as total revenue recorded for the period, inclusive of the impact of derivatives settled in cash. For more information, please refer to Non-IFRS Measures, below.
(f)	Calculated as the availability on the Company’s Revolving Credit Facility (“SLL”) and cash on hand (unrestricted)of December 31, 2024; Does not include the impact of Letters of Credit.
(g)	Net Debt-to-Adjusted EBITDA, or “Leverage” or “Leverage Ratio,” is measured as Net Debt divided by Pro Forma Adjusted EBITDA; Pro forma adjusted EBITDA includes adjustments for the year ended December 31, 2024 for the annualized impact of acquisitions completed during the year. Net Debt calculated as of December 31, 2024 and includes total debt as recognized on the balance sheet, less cash and restricted cash; Total debt includes the Company’s borrowings under the Company’s Revolving Credit Facility (“SLL”) and borrowings under or issuances of, as applicable, the Company’s subsidiaries’ securitization facilities. For more information, please refer to Non-IFRS Measures, below.