Diversified Energy (DEC) Q3 2024 TU earnings summary

Executive summary

• Strategic acquisitions in 2024 totaling $585 million expanded production scale and geographic reach, with over 350 MMcfepd of high-margin production added and a 14% increase in average production over adjusted 4Q23 levels.

• Focused on optimizing mature, long-life U.S. energy assets, low-decline PDP assets, and modernized field management to drive resilient cash flows, operational efficiency, and minimize traditional E&P risks.

• Vertically integrated operations and in-house well retirement enhance stewardship and sustainability, with 165 operated wells retired year-to-date and a goal to retire over 200 wells in 2024.

• Expanded revenue streams through coal mine methane capture, environmental credit sales, and a fixed-price LNG supply contract.

• Systematic debt reduction, shareholder returns, and accretive acquisitions remain strategic pillars, with significant progress on growth, capital allocation, and operational efficiency.

Financial highlights

• 3Q24 average net daily production: 829–830 MMcfepd, with over 50% from the central region, and a September exit rate of 851 MMcfepd.

• 3Q24 total revenue: $239 million (including hedges); YTD revenue: $685 million with $130 million from settled hedges.

• Adjusted EBITDA: $115 million for 3Q24 (49%–50% margin); YTD Adjusted EBITDA: $333 million.

• Free cash flow: $47 million in 3Q24 ($139 million YTD); TTM free cash flow yield: 32%.

• Net debt as of September 30, 2024: $1.64 billion; borrowing base reaffirmed at $385 million.

Outlook and guidance

• On track to deliver full-year goals, maintaining focus on debt reduction, shareholder returns, and growth, with continued asset sales and opportunistic monetization of undeveloped acreage.

• Coal mine methane EBITDA of $8–$10 million expected for the year, with potential for further growth.

• 60–80% of natural gas volumes hedged over the next five years, supporting cash flow stability.

• Well-positioned to meet or exceed the 2024 goal of retiring 200 wells.