Diversified Energy (DEC) Q1 2025 TU earnings summary

Executive summary

• Closed Maverick and Summit Natural Resources acquisitions, nearly doubling revenues and free cash flow, with Maverick contributing two weeks to Q1 2025 results.

• Returned over $59 million to shareholders in Q1 2025 via dividends and share repurchases.

• Retired $51 million of debt principal in Q1 2025, maintaining a leverage ratio of ~2.7x and $451 million undrawn credit capacity.

• Focus remains on systematic debt reduction, shareholder returns, and growth through accretive acquisitions.

• Published 5th annual Sustainability Report and advanced well retirement procedures in partnership with West Virginia.

Financial highlights

• Q1 2025 total revenue was $295 million; adjusted EBITDA reached $138 million with a 47% margin; free cash flow was $62 million, representing a 45% conversion rate.

• Q1 2025 average production was 864 MMcfepd, with a March exit rate of 1,149 MMcfepd.

• Net debt stood at $2.56 billion; credit facility borrowing base increased to $900 million, with $451 million undrawn.

• Net loss of $337 million in Q1 2025, driven by non-cash unsettled derivative adjustments.

• Per unit revenue was $3.78/Mcfe; adjusted operating cost was $2.00/Mcfe.

Outlook and guidance

• 2025 production guidance: 1,050–1,100 MMcfepd, with 25% liquids and 75% natural gas.

• 2025 adjusted EBITDA guidance: $825–$875 million; capital expenditures: $165–$185 million.

• Free cash flow guidance for 2025: ~$420 million, a 200% increase over 2024 standalone results.

• Targeting leverage ratio of 2.0x–2.5x and annualized synergies exceeding $50 million from Maverick integration.

• Coal mine methane revenue stream expected to grow up to 300% from 2024 levels by 2026.