Diversified Energy Company plc (LON:DEC, NYSE: DEC) has announced its financial and operational results for the three months ended March 31, 2026.
First Quarter and Recent Highlights
- Camino Natural Resources Acquisition: Innovative Carlyle acquisition financing structure utilized for joint acquisition of $1.175B Oklahoma asset, further expanding the Company’s leading Oklahoma operations
- Closing of Sheridan Acquisition: Acquisition closed on April 30th, adding ~62 MMcfepd of production and ~$52M of NTM EBITDA contiguous to our portfolio of assets in East Texas
- Shareholder Returns: Returned $94M to shareholders in 1Q26, including $72M in share repurchases in conjunction with the full exit of EIG, the former primary owner of Maverick Natural Resources
- Portfolio Optimization: Recorded over $100M in proceeds from optimization activities in 1Q26, further extending the Company’s ability to generate material free cash flow from its extensive portfolio of assets
- Expanded Non-Op Portfolio: Expanded to three non-op partnerships with leading operators, including Mewbourne (Anadarko Basin) and Continental Resources (Permian Basin), positioning the Company to increase future production and reserves from highly profitable new wells
First Quarter 2026 Results
- Average production: 1,198 MMcfepd (200 Mboepd)
- Production exit rate(a): 1,228 MMcfepd (205 Mboepd)
- Total Commodity Revenue: $556M
- Net Loss: $161M, inclusive of $398M loss on non-cash unsettled derivatives
- Adjusted EBITDA(b): $287M
- Operating Cash Flow: $169M
- Adjusted Free Cash Flow(c): $160M after $11M of transaction costs
- Capital Expenditures: $58M
Rusty Hutson, Jr., CEO of Diversified Energy, commented:
“We are off to a terrific start in our 25th year of business. In this year of celebration and reflection of our history, I am very pleased that our teams started 2026 by delivering another strong quarterly performance, and were able to produce year-over year adjusted free cash flow growth of 157%, while managing through a quarter that saw Winter Storm Fern and the war in Iran creating challenging operating conditions and nearly unprecedented commodity price volatility. Importantly, the robust cash flow generated by reliable production of our assets allowed us to further strengthen the balance sheet through $92 million of systematic debt reduction, returned $94 million to shareholders through a combination of dividends and share repurchases, and deployed capital into two strategic acquisitions.
Looking ahead, I am incredibly excited about the future of Diversified Energy. With the Sheridan acquisition recently closed and the innovatively structured Camino acquisition, with our partners at The Carlyle Group, expected to close in the third quarter, we are once again transforming our platform and enhancing our long‑term positioning as the leading consolidator of cash-generating energy assets in the US. On a pro forma basis, these transactions increase our cash flow and expand our vast acreage position, creating significant optionality within our portfolio optimization program. Our scale positions Diversified to benefit from powerful, long‑term demand drivers, including power generation, data center growth, LNG exports, and the continued importance of U.S. energy production amid global geopolitical uncertainty. As the largest individual shareholder in Diversified Energy, I believe our differentiated and proven business model, expanded footprint, culture of focused execution, and our ability to generate consistent free cash flow position us better than ever before to capitalize on these trends and drive sustainable, long‑term shareholder value.”
| Financial and Operational Metrics | |||||
| Three Months Ended | |||||
| March 31, 2026 | March 31, 2025 | 1Q/1Q % Change | December 31, 2025 | 1Q/4Q % Change | |
| Production (Mmcfe/d) | 1,198 | 864 | 39% | 1,198 | 0% |
| Production volume mix | |||||
| Natural gas | 71% | 82% | 72% | ||
| NGLs | 14% | 12% | 14% | ||
| Oil | 15% | 6% | 14% | ||
| Total Commodity Revenue (millions) | $556 | $329 | 69% | $429 | 30% |
| Net Income (Loss) (millions) | $(161) | $(323) | 50% | $196 | (182)% |
| Adj. EBITDA(b) (millions) | $287 | $138 | 108% | $254 | 13% |
| Adj. Free Cash Flow(c) (millions) | $160 | $62 | 157% | $130 | 23% |
Financial Strength and Shareholder Returns
- Liquidity: $529M of credit facility availability and unrestricted cash as of March 31, 2026
- ABS principal reduction: Retired $92M in outstanding debt under certain ABS notes
- Leverage ratio(d): 2.2x as of March 31, 2026;
- Consolidated debt consists of ~72% in deleveraging non-recourse ABS notes
- 1Q26 dividend: $0.29 per share declared
Strategic Execution and Transformational Growth
Camino Natural Resources: Carlyle Partnership in full-force, with joint acquisition of $1.175B Oklahoma asset
- Innovative acquisition financing structure that drives enhanced returns for shareholders and bolsters the continuation of long-term growth
Non-Op Platform Continues to Provide Additional Lever for Value Generation
- Continental Resources Permian Basin joint development program bolsters Non-Op platform alongside Mewbourne JDA in Oklahoma and private operator JDA in the Northwest Shelf
- Oklahoma Joint Development Partnership continues to generate an estimated 60% IRRs with ~135 wells drilled under the JDA in the last 3 years, with ~160 wells remaining in JDA inventory
- Non-Op development efficiently adds incremental production that offsets an estimated ~50% of natural decline (2026 estimated avg. ~10,800 Boepd) annually across three partnerships
- DEC Oklahoma inventory includes 450 economic locations pro forma for Camino
Unlocking Value Through Portfolio Optimization
- Our Portfolio Optimization Program (“POP”) realized over $100M from non-core asset and leasehold divestitures
- Our POP highlights optionality in DEC’s expansive and diverse portfolio to monetize our acreage position via Non-Op Partnerships or leasehold divestitures
- Generated ~$3M of cash flow from environmental credits related to Coal Mine Methane (CMM) in 1Q26
Operations and Finance Update
First Quarter Production
The Company recorded exit rate production as of March 31, 2026 of 1,228 MMcfepd (205 Mboepd)(a) and delivered average daily production of 1,198 MMcfepd (200 Mboepd) for the three months ended March 31, 2026. The Company’s production volume mix was approximately 71% natural gas, 14% natural gas liquids (“NGLs”), and 15% oil, with approximately 66% of production volumes from the Central region and 34% from Appalachia for the three months ended March 31, 2026. Production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.
First Quarter Margin and Total Cash Expenses per Unit
For the three months ended March 31, 2026, Diversified delivered per unit revenues of $4.87/Mcfe(e) ($29.22/Boe) and Adjusted EBITDA Margin(b) of 68%. Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids production following the 2025 Maverick Natural Resources & Canvas Energy acquisitions. The Company’s per unit expenses are anticipated to improve as the Company implements its playbook to achieve long-term, sustainable synergies and cost savings. For example, General and Administrative expenses decreased during the three months ended March 31, 2026 compared to prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture and highlighting our ability to profitability add assets due to our scale and existing capabilities.
| Three Months Ended | |||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | December 31, 2025 | |||||||||||||||||||
| $/Mcfe | $/Boe | $/Mcfe | $/Boe | $/Mcfe | $/Boe | ||||||||||||||||
| Average realized price(1) | $ | 3.76 | $ | 22.56 | $ | 3.57 | $ | 21.42 | $ | 4.08 | $ | 24.48 | |||||||||
| Other revenue(2)(e) | 0.17 | 1.02 | 0.19 | 1.14 | 0.12 | 0.72 | |||||||||||||||
| Proceeds from divestitures(3) | 0.94 | 5.64 | 0.03 | 0.18 | 0.15 | 0.90 | |||||||||||||||
| Total revenue and proceeds from divestitures, excluding Next Level Energy(4) | $ | 4.87 | $ | 29.22 | $ | 3.79 | $ | 22.74 | $ | 4.35 | $ | 26.10 | |||||||||
| Lease operating expense(5)(e) | $ | 1.19 | $ | 7.14 | $ | 0.91 | $ | 5.46 | $ | 1.12 | $ | 6.72 | |||||||||
| Production taxes | 0.28 | 1.68 | 0.21 | 1.26 | 0.21 | 1.26 | |||||||||||||||
| Midstream operating expense | 0.19 | 1.14 | 0.24 | 1.44 | 0.18 | 1.08 | |||||||||||||||
| Transportation expense | 0.26 | 1.56 | 0.34 | 2.04 | 0.22 | 1.32 | |||||||||||||||
| Total operating expense(6) | $ | 1.92 | $ | 11.52 | $ | 1.70 | $ | 10.20 | $ | 1.73 | $ | 10.38 | |||||||||
| Employees, administrative costs and professional fees(7) | 0.25 | 1.50 | 0.30 | 1.80 | 0.29 | 1.74 | |||||||||||||||
| Adjusted Operating Cost per Unit(8) | $ | 2.17 | $ | 13.02 | $ | 2.00 | $ | 12.00 | $ | 2.02 | $ | 12.12 | |||||||||
| Adjusted EBITDA Margin(9) | 68 | % | 47 | % | 55 | % | |||||||||||||||
| (1 | ) | Total commodity revenue, including settled derivatives. |
| (2 | ) | Total midstream and other revenue, excluding Next Level Energy revenue. |
| (3 | ) | Proceeds from divestitures represents cash proceeds related to asset optimization |
| (4 | ) | Total revenue and proceeds from divestitures related to asset optimization, excluding Next Level Energy revenue. |
| (5 | ) | Total lease operating expense, excluding Next Level Energy lease operating expense. |
| (6 | ) | Total operating expense, excluding Next Level Energy lease operating expense. |
| (7 | ) | Total employees, administrative costs, and professional fees, excluding Next Level Energy. These costs include payroll and benefits for our administrative and corporate staff, costs of maintaining administrative and corporate offices, costs of managing our production operations, franchise taxes, public company costs, fees for audit and other professional services, and legal compliance. |
| (8 | ) | Adjusted Operating Cost per Unit excludes lease operating expense and employees, administrative costs and professional fees attributable to Next Level Energy. |
| (9 | ) | Adjusted EBITDA Margin represents adjusted EBITDA, as a percentage of total revenue, excluding (gain) loss on fair value adjustments of unsettled derivatives. |
Share Repurchase Program
For the three months ended March 31, 2026 and through May 6, 2026, the Company repurchased 5,033,364(f) shares, representing approximately 7% of the shares outstanding.
2026 Outlook
The Company is reiterating its previously announced Full Year 2026 guidance. Following the recently completed acquisitions Diversified expects to realize continued significant operational synergies associated with a larger, consolidated position in Oklahoma, additional cash generation from its portfolio optimization program, and the ability to continue to improve the overall cost structure of its established producing assets while continuing to prioritize returns and Free Cash Flow generation.
| 2026 Guidance(1) | |
| Total Production (Mmcfe/d) | 1,170 to 1,210 |
| % Liquids | ~28% |
| % Natural Gas | ~72% |
| Total Capital Expenditures (millions) | |
| Non-Op JV Partnership | $135 to $155 |
| Maintenance/Other | $70 to $80 |
| Adj. EBITDA(b) (millions) | $925 to $975 |
| Adj. Free Cash Flow(c) (millions) | ~$430 |
| Leverage Target | 2.0x to 2.5x |
| (1 | ) | Includes the value of anticipated cash proceeds for 2026 asset optimization of ~$100 million; based on January 2026 strip prices. Excludes changes in cash from working capital. Does not incorporate recently closed Sheridan Production acquisition or recently announced Camino acquisition. The Company includes Adjusted EBITDA and Adjusted Free Cash Flow in the Company’s Full Year 2026 Outlook. Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures and have not been reconciled to the most comparable GAAP financial measures because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management’s control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide an outlook for the comparable GAAP measures. |
Conference Call Details
The Company will host a conference call Thursday, May 7, 2026, at 8:30 AM ET to discuss the first quarter 2026 results and will make an audio replay of the event available shortly thereafter.
| US (toll-free) | +1 877-836-0271/+1 201-689-7805 |
| UK (toll-free) | +44 (0)800 756 3429 |
| Web Audio | https://www.div.energy/news-events/ir-calendarevents |
| Replay Information | https://ir.div.energy/financial-info |
Footnotes:
| (a) | Exit rate includes full month of March 2026 production. | |
| (b) | Adjusted EBITDA represents earnings before interest, taxes, depletion, and amortization, and includes adjustments for items that are not comparable period-over-period; Adjusted EBITDA Margin represents Adjusted EBITDA as a percent of Total Revenue, Inclusive of derivatives settled in cash; For more information, please refer to the Non-GAAP reconciliations as set out below. | |
| (c) | Adjusted Free Cash Flow represents net cash provided by operating activities excluding changes in cash from working capital less expenditures on natural gas and oil properties and equipment, and includes proceeds from divestitures related to asset optimization; For more information, please refer to the Non-GAAP reconciliations as set out below. | |
| (d) | “Leverage” or “leverage ratio,” is measured as net debt divided by pro forma adjusted TTM EBITDA as of March 31, 2026. Reconciliation table is provided in the appendix of this release. | |
| (e) | Includes the impact of derivatives settled in cash and proceeds from divestitures related to asset optimization. For purposes of comparability, excludes Other Revenue of $1M in 1Q26, $3M in 1Q25, and $2M in 4Q25, and Lease Operating Expense of $4M in 1Q26, $3M in 1Q25, and $4M in 4Q25 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy. | |
| (f) | Includes total share repurchases (including by the Employee Benefit Trust) from January 1, 2026 through May 6, 2026. | |
For Company-specific items, refer also to the Glossary of Terms found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the United States Securities and Exchange Commission and available on the Company’s website.
