REG-Diversified Energy Achieves Strong Quarterly Results and Raises 2025 Financial Guidance
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Robust Cash Flow Generation Driven by Increased Scale, Operational Synergies,
and Asset Optimization Strategy
Improved Leverage Year-to-Date by Approximately 20% and Within Target Range
Returned a Record ~$146 million to Shareholders Through Dividends and
Repurchases Year to Date, Further Validating Cash Generative Business Model
Diversified Energy Company PLC (“Diversified”, "DEC" or the “Company”)
(LSE: DEC, NYSE: DEC) is pleased to announce the following operational and
financial results for the quarter ended September 30, 2025.
Third Quarter 2025 Results
* Production exit rate((a)): 1,144 MMcfepd (191 Mboepd) * Average
production: 1,127 MMcfepd (188 Mboepd)
* Production volume mix (natural gas, NGLs, oil): 74% / 13% / 13%
* Total Revenue (including settled hedges)((d)): $500 million
* Operating Cash Flow: ~$166 million
* Adjusted EBITDA((b)): ~$286 million; Record quarterly result
* Adjusted Free Cash Flow((c)): ~$144 million after ~$9 million of
nonrecurring costs
* Revenue per unit((d)): $4.82/Mcfe ($28.92/Boe)
* Adjusted cost per unit((e)): $2.08/Mcfe ($12.48/Boe)
* 2025 Guidance: Raised Adjusted EBITDA ~7% and Adjusted Free Cash Flow ~5%
Strong Financial and Operational Metrics
3Q25 3Q24 YoY % Change 9mo Ended Sep. 30, '25 9mo Ended Sep. 30, '24 YoY % Change
Production (Mmcfe/d) 1,127 829 36% 1,048 774 35%
Production volume mix
Natural gas 74 % 84 % 76 % 84 %
NLGs 13 % 12 % 13 % 12 %
Oil 13 % 3 % 11 % 3 %
Total Revenue ((d) )(millions) $500 $244 105 % $1,304 $692 88 %
Adj. EBITDA ((b) )( millions) $286 $115 149 % $704 $333 111 %
Adj. FCF ((c) )( millions) $144 $56 157 % $296 $158 87 %
Financial Strength and Shareholder Returns
* 3Q25 dividend: $0.29 per share declared
* Shareholder returns: Over $146 million returned YTD via dividends and
repurchases((f))
* Share repurchases: ~5.1 million shares repurchased YTD (~7% of current
outstanding shares), totaling ~$61 million((f))
* Liquidity: ~$440 million consisting of undrawn credit facility capacity and
unrestricted cash
* Leverage ratio: 2.4x Net Debt to Adjusted EBITDA; ~20% improvement from
YE2024 * Consolidated debt consists of ~70% in non-recourse, amortizing ABS
notes
* ABS debt reduction: retired ~$203 million in principal during first three
quarters of 2025
Strategic Execution and Transformational Growth
Mountain State Plugging Fund & Next LVL Energy
* Groundbreaking partnership to establish the nation’s FIRST financial
assurance fund dedicated to retirement of DEC owned wells (~21,000) in the
state of West Virginia. Since establishment of DEC's well service company,
Next Level Energy in 2022, Diversified has retired ~1,200 wells
Canvas Energy Acquisition
* Highly synergistic with significant operational overlap in DEC’s core
Oklahoma operating area
* Tangible opportunity for portfolio optimization potential from undeveloped
acreage and added highly valuable, multi-decade cash generating reserves
* Utilizing Carlyle strategic funding partnership and on track to close in 4Q
2025
Oil & Gas Methane Partnership (OGMP) Achievement
* Gold Standard Reporting and marks fourth consecutive year of recognition for
protocol based on a comprehensive, measurement-based framework for methane
detection and mitigation
Unlocking Value Through Portfolio Optimization
* Portfolio Optimization Program ("POP") * Realized an additional ~$74
million from non-core asset and leasehold divestitures in 3Q, bringing
year-to-date proceeds up to ~$144 million
* Appalachian Compressor Station * $500,000 margin-enhancing acquisition,
which was identified and integrated by our field team, has lead to over $3
million per year in run-rate cost savings including incremental CMM credits
Rusty Hutson, Jr., CEO of Diversified, commented:
“I am very pleased to report that our year-to-date results have exceeded our
plans and our teams have continued to perform with operational focus and
excellence. Our growing portfolio of high-quality assets continued to deliver
exceptional results this quarter, generating a year-over-year increase of
approximately 105% in revenue((d)) and 157% in free cash flow((c)),
demonstrating Diversified’s ability to generate substantial value in
volatile markets. This performance reflects the strength of our business
model, the disciplined approach to acquire assets, the commitment to our
optimization strategy, the consistency of our operational execution, and our
ability quickly and efficiently integrate acquisitions to capture synergies
and enhance margins.
Importantly, we also delivered on our leverage target goal ahead of schedule,
ending the quarter with a net debt-to-adjusted EBITDA leverage ratio of
approximately 2.4x. Significant strategic work over the last few years has
built us into a company with higher growth prospects, a robust cash flow
profile, and solid footing to deliver on our capital allocation framework.
This progress has enabled us to strengthen our commitment to shareholders with
a record year-to-date return of capital through dividends and share
repurchases of approximately seven percent of our current shares outstanding.
The strength of our underlying business, our strategy, and our capabilities,
coupled with our strategic partnership with the Carlyle Group, has allowed us
to execute our disciplined inorganic growth through an accretive acquisition
strategy with the recently announced agreement to purchase Canvas Energy. We
believe the strong fit with our existing Oklahoma assets, our differentiated
scale, and vertical integration will drive attractive financial returns. Our
established acquisition integration playbook, the execution of which allowed
us to complete both field-level and corporate-level integration of Maverick
ahead of schedule, creates high confidence in our ability to execute the
integration of Canvas. We remain well-positioned with strong liquidity and
further balance sheet optionality for a robust funnel of potential
high-quality opportunities.
Looking ahead, given our momentum on synergy capture, numerous portfolio
optimization opportunities, and strong third-quarter performance, we are
raising our financial guidance ranges for fiscal year 2025 for both adjusted
EBITDA and Free Cash Flow. In addition, we continued to believe that our
proposed redomestication to the United States and the change in our primary
listing to the New York Stock Exchange, which includes full SEC reporting for
domestic issuers beginning with year-end 2025 results, will offer several
potential benefits that are in the best interest of all shareholders.
With outstanding performance across our platform, Diversified is
well-positioned to thrive as a proven portfolio manager of cash generating
energy assets in today’s evolving corporate landscape. We are proud to be
the Right Company at the Right Time, delivering essential energy while
creating long-term value for all stakeholders.”
Operations and Finance Update
Production
The Company recorded exit rate production in September 2025 of 1,144 MMcfepd
(191 Mboepd)((b) )and delivered 3Q25 average net daily production of 1,127
MMcfepd (188 Mboepd). Net daily production for the quarter continued to
benefit from Diversified’s peer-leading, shallow decline profile.
Margin and Total Cash Expenses per Unit
Diversified delivered 3Q25 per unit revenues of $$4.82/Mcfe ($28.92/Boe) and
Adjusted EBITDA Margin((a)) of 66% (74% unhedged). The Company’s per unit
expenses are anticipated to improve as the Company implements its playbook to
achieve sustainable synergies and cost savings.
3Q25 3Q24
$/Mcfe $/Boe $/Mcfe $/Boe
Average Realized Price $3.98 $23.88 $2.94 $17.64
Other Revenue $0.13 $0.78 $0.14 $0.84
Total Revenue & Divestitures(d) $4.82 $28.92 $3.20 $19.20
Lease Operating Expense $1.18 $7.08 $0.77 $4.62
Production taxes $0.22 $1.32 $0.10 $0.60
Midstream operating expense $0.20 $1.20 $0.23 $1.38
Transportation expense $0.26 $1.56 $0.32 $1.92
Total Operating Expense $1.86 $11.16 $1.42 $8.52
Employees, Administrative Costs and Professional Fees(g) $0.22 $1.32 $0.28 $1.68
Adjusted Operating Cost per Unit(e) $2.08 $12.48 $1.70 $10.20
Adjusted EBITDA Margin(b) 66% 48%
Full Year 2025 Outlook
The Company is increasing its previously announced Full Year 2025 guidance
following the recently completed quarter. Specifically, Diversified has raised
its range on Adjusted EBITDA and increased its target for Adjusted Free Cash
Flow. The table below outlines these adjustments.
2025 Guidance (Original) 2025 Guidance (Updated)
Total Production (Mmcfe/d) 1,050 to 1,100 1,050 to 1,100
% Liquids ~25% ~25%
% Natural Gas ~75% ~75%
Total Capital Expenditures (millions) $165 to $185 $175 to $185
Adj. EBITDA ((1))(millions) $825 to $875 $900 to $925
Adj. Free Cash Flow ((1))(millions) ~$420 ~$440
Leverage Target 2.0x to 2.5x 2.0x to 2.5x
Combined Company Synergies (millions) ~$60 ~$60
((1) )Includes the value of completed and anticipated cash proceeds for 2025
land sales.
The Company includes Adjusted EBITDA and Adjusted Free Cash Flow in the
Company’s Full Year 2025 Outlook. Adjusted EBITDA and Adjusted Free Cash
Flow are non-IFRS financial measures and have not been reconciled to the most
comparable IFRS 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 IFRS measures.
Conference Call Details
The Company will host a conference call tomorrow, Tuesday, November 4, 2025,
at 8:30 AM EST 1:30 PM GMT to discuss the 3Q25 Results and will make an audio
replay of the event available shortly thereafter.
Conference Details
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
For further information, please contact:
Diversified Energy Company PLC +1 973 856 2757
Doug Kris dkris@dgoc.com
Senior Vice President, Investor Relations & Corporate Communications
FTI Consulting dec@fticonsulting.com
U.S. & UK Financial Public Relations
About Diversified Energy Company PLC
Diversified is a leading publicly traded energy company focused on acquiring,
operating, and optimizing cash generating energy assets. Through our unique
differentiated strategy, we acquire existing, long-life assets and invest in
them to improve environmental and operational performance until retiring those
assets in a safe and environmentally secure manner. Recognized by ratings
agencies and organizations for our sustainability leadership, this
solutions-oriented, stewardship approach makes Diversified the Right Company
at the Right Time to responsibly produce energy, deliver reliable free cash
flow, and generate shareholder value.
Footnotes:
((a)) Exit rate includes full month of September 2025 production.
((b)) Adjusted EBITDA represents earnings before interest, taxes, depletion,
and amortization, and includes proceeds from divestitures and adjustments for
items that are not comparable period-over-period; Adjusted EBITDA Margin
represents Adjusted EBITDA as a percent of Total Revenue, Inclusive of Settled
Hedges.
((c)) Adjusted 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, and includes proceeds from divestitures; For more
information, please refer to the Non-IFRS reconciliations as set out below.
((d)) Includes the impact of derivatives settled in cash and proceeds from
divestitures; For purposes of comparability, excludes Other Revenue of $4
million in 3Q25, $4 million in 3Q24, and Lease Operating Expense of $4 million
in 3Q25, $5 million in 3Q24 associated with Diversified’s wholly owned
plugging subsidiary, Next LVL Energy.
((e)) Adjusted Operating Cost represent total lease operating costs plus
recurring administrative costs. Total lease operating costs include base lease
operating expense, owned gathering and compression (midstream) expense,
third-party gathering and transportation expense, and production taxes.
Recurring administrative expenses (Adjusted G&A) is a Non-IFRS financial
measure defined as total administrative expenses excluding non-recurring
acquisition & integration costs and non-cash equity compensation; For purposes
of comparability, excludes certain amounts related to Diversified’s wholly
owned plugging subsidiary, Next LVL Energy.
((f)) Includes the total value of dividends paid and declared, and share
repurchases (including Employee Benefit Trust) year-to-date, through August
11, 2025.
((g)) As used herein, employees, administrative costs and professional
services represent total administrative expenses excluding cost associated
with acquisitions, other adjusting costs and non-cash expenses. We use
employees, administrative costs and professional services because this measure
excludes items that affect the comparability of results or that are not
indicative of trends in the ongoing business.
Forward-Looking Statements
This announcement contains forward-looking statements (within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995) concerning the
financial condition, results of operations, business and outlook of the
Company and its wholly owned subsidiaries (the “Group”). All statements
other than statements of historical fact are, or may be deemed to be,
forward-looking statements. These forward-looking statements, which contain
the words "anticipate", "believe", "intend", "estimate", "expect", "may",
"will", "seek", "continue", "aim", "target", "projected", "plan", "goal",
"achieve", “guidance” and words of similar meaning, reflect the Company's
beliefs and expectations and are based on numerous assumptions regarding the
Company's present and future business strategies and the environment the
Company and the Group will operate in and are subject to risks and
uncertainties that may cause actual results to differ materially. No
representation is made that any of these statements or forecasts will come to
pass or that any forecast results will be achieved. Forward-looking statements
involve inherent known and unknown risks, uncertainties and contingencies
because they relate to events and depend on circumstances that may or may not
occur in the future and may cause the actual results, performance or
achievements of the Company or the Group to be materially different from those
expressed or implied by such forward looking statements. Many of these risks
and uncertainties relate to factors that are beyond the Company's or the
Group's ability to control or estimate precisely, such as future market
conditions, currency fluctuations, the behavior of other market participants,
the actions of regulators and other factors such as the Company's or the
Group's ability to continue to obtain financing to meet its liquidity needs,
the Company’s ability to successfully integrate acquisitions, including the
acquired Maverick assets, changes in the political, social and regulatory
framework, including inflation and changes resulting from actual or
anticipated tariffs and trade policies, in which the Company or the Group
operate or in economic or technological trends or conditions. The list above
is not exhaustive and there are other factors that may cause the Company's or
the Group's actual results to differ materially from the forward-looking
statements contained in this announcement, Including the risk factors
described in the “Risk Factors” section in the Company’s Annual Report
and Form 20-F for the year ended December 31, 2024, filed with the United
States Securities and Exchange Commission.
Forward-looking statements speak only as of their date and neither the Company
nor the Group nor any of its respective directors, officers, employees,
agents, affiliates or advisers expressly disclaim any obligation to
supplement, amend, update or revise any of the forward-looking statements made
herein, except where it would be required to do so under applicable law. In
light of these risks, uncertainties and assumptions, the events described in
the forward-looking statements in this announcement, may not occur. As a
result, you are cautioned not to place undue reliance on such forward-looking
statements. Past performance of the Company cannot be relied on as a guide to
future performance. No statement in this announcement is intended as a profit
forecast or a profit estimate and no statement in this announcement should be
interpreted to mean that the financial performance of the Company for the
current or future financial years would necessarily match or exceed the
historical published for the Company.
Use of Non-IFRS Measures
Certain key operating metrics that are not defined under IFRS (alternative
performance measures) are included in this announcement. These non-IFRS
measures are used by us to monitor the underlying business performance of the
Company from period to period and to facilitate comparison with our peers.
Since not all companies calculate these or other non-IFRS metrics in the same
way, the manner in which we have chosen to calculate the non-IFRS metrics
presented herein may not be compatible with similarly defined terms used by
other companies. The non-IFRS metrics should not be considered in isolation
of, or viewed as substitutes for, the financial information prepared in
accordance with IFRS. Certain of the key operating metrics are based on
information derived from our regularly maintained records and accounting and
operating systems.
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion,
depreciation and amortization. Adjusted EBITDA includes adjusting for items
that are not comparable period-over-period, namely, finance costs, accretion
of asset retirement obligation, other (income) expense, loss on joint and
working interest owners receivable, gain on bargain purchases, (gain) loss on
fair value adjustments of unsettled financial instruments, (gain) loss on
natural gas and oil property and equipment, costs associated with
acquisitions, other adjusting costs, loss on early retirement of debt,
non-cash equity compensation, (gain) loss on foreign currency hedge, net
(gain) loss on interest rate swaps and items of a similar nature.
Adjusted EBITDA should not be considered in isolation or as a substitute for
operating profit or loss, net income or loss, or cash flows provided by
operating, investing, and financing activities. However, we believe such a
measure is useful to an investor in evaluating our financial performance
because it (1) is widely used by investors in the natural gas and oil industry
as an indicator of underlying business performance; (2) helps investors to
more meaningfully evaluate and compare the results of our operations from
period to period by removing the often-volatile revenue impact of changes in
the fair value of derivative instruments prior to settlement; (3) is used in
the calculation of a key metric in one of the financial covenants under our
revolving credit facility; and (4) is used by us as a performance measure in
determining executive compensation. When evaluating this measure, we believe
investors also commonly find it useful to evaluate this metric as a percentage
of our total revenue, inclusive of settled hedges, producing what we refer to
as our adjusted EBITDA margin.
The following table presents a reconciliation of the IFRS Financial measure of
Net Income (Loss) to Adjusted EBITDA for each of the periods listed:
Three Months Ended
(In thousands) September 30, 2025 September 30, 2024
Income (loss) available to ordinary shareholders after taxation $ 165,856 $ (713 )
Finance costs 55,261 39,609
Accretion of asset retirement obligation 13,241 7,878
Other (income) expense ((1)) (519 ) (207 )
Income tax (benefit) expense (43,987 ) 86,098
Depreciation, depletion and amortization 95,587 63,304
(Gain) loss on fair value adjustments of unsettled financial instruments (69,509 ) (93,211 )
(Gain) loss on oil and gas programme and equipment ((2)) 58,089 729
Costs associated with acquisitions 4,129 3,317
Other adjusting costs ((3)) 4,969 4,280
Loss on early retirement of debt — 1,635
Non-cash equity compensation 2,984 2,359
(Gain) loss on interest rate swap (35 ) (49 )
Total adjustments $ 120,210 $ 115,742
Adjusted EBITDA $ 286,066 $ 115,029
Pro forma TTM adjusted EBITDA ((4)) $ 1,021,507 $ 555,456
(1) Excludes $0.4 million and $0.2 million in dividend distributions received
for our investment in DP Lion Equity Holdco during the three months ended
September 30, 2025 and 2024, respectively.
(2) Excludes $74 million and $11 million in cash proceeds received for
leasehold sales during the three months ended September 30, 2025 and 2024,
respectively, less $54 million of basis in leasehold sales for the three
months ended September 30, 2025.
(3) Other adjusting costs for the three months ended September 30, 2025 and
2024 were primarily associated with one-time personnel-related expenses and
legal fees from certain litigation.
(4) Includes adjustments for the trailing twelve months ended September 30,
2025 for the Maverick, Summit, Crescent Pass, and East Texas II acquisitions
as well as for the trailing twelve months ended September 30, 2024 for the
Oaktree acquisition.
Net Debt and Net Debt-to-Adjusted EBITDA
As used herein, net debt represents total debt as recognized on the balance
sheet less cash and restricted cash. Total debt includes our borrowings under
our revolving credit facility and our borrowings under or issuances of, as
applicable, our subsidiaries’ securitization facilities, excluding original
issuance discounts and deferred finance costs. We believe net debt is a useful
indicator of our leverage and capital structure.
As used herein, net debt-to-adjusted EBITDA, or “leverage” or “leverage
ratio,” is measured as net debt divided by adjusted trailing twelve-month
EBITDA. We believe that this metric is a key measure of our financial
liquidity and flexibility and is used in the calculation of a key metric in
one of the financial covenants under our revolving credit facility.
The following table presents a reconciliation of the IFRS Financial measure of
Total Non-Current Borrowings to the Non-IFRS measure of Net Debt and a
calculation of Net Debt-to-Adjusted EBITDA and Net Debt-to-Pro Forma Adjusted
EBITDA for each of the periods listed:
As of
(In thousands) September 30, 2025 September 30, 2024 December 31, 2024
Total debt $ 2,600,393 $ 1,697,210 $ 1,693,242
LESS: Cash and cash equivalents 43,102 9,013 5,990
LESS: Restricted cash ((1)(2)) 103,673 49,678 46,269
Net debt $ 2,453,618 $ 1,638,519 $ 1,640,983
Pro forma TTM adjusted EBITDA ((3)) $ 1,021,507 $ 555,456 $ 548,570
Net debt-to-pro forma TTM adjusted EBITDA ((4)) 2.4x 2.9x 3.0x
(1) Includes adjustments for deferred financing costs and original issue
discounts, consistent with presentation on the Statement of Financial
Position.
(2) The increase of restricted cash as of September 30, 2025 and 2024, is due
to the addition of $19 million and $31 million in restricted cash for the ABS
X Notes and ABS Maverick Notes, respectively, offset by $4 million for the
retirement of the ABS I & II notes.
(3) Includes adjustments the trailing twelve months ended September 30, 2025
for the Maverick, Summit, Crescent Pass, and East Texas II acquisitions as
well as for the trailing twelve months ended September 30, 2024 for the
Oaktree acquisition.
(4)Does not include adjustments for working capital which are often customary
in the market.
Free Cash Flow
As used herein, 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. We believe that free cash flow is a useful
indicator of our ability to generate cash that is available for activities
other than capital expenditures. The Directors believe that free cash flow
provides investors with an important perspective on the cash available to
service debt obligations, make strategic acquisitions and investments, and pay
dividends.
The following table presents a reconciliation of the IFRS Financial measure of
Net Cash from Operating Activities to the Non-IFRS measure of Free Cash Flow
for each of the periods listed:
Three Months Ended
(In thousands) September 30, 2025 September 30, 2024
Net cash provided by operating activities $ 165,672 $ 102,008
LESS: Expenditures on natural gas and oil properties and equipment (48,231 ) (16,854 )
LESS: Cash paid for interest (47,877 ) (38,431 )
Free cash flow $ 69,564 $ 46,723
ADD: Proceeds from divestitures 74,006 8,780
Adjusted FCF $ 143,570 $ 55,503
Total Revenue, Inclusive of Settled Hedges and Adjusted EBITDA Margin
As used herein, total revenue, inclusive of settled hedges, includes the
impact of derivatives settled in cash. We believe that total revenue,
inclusive of settled hedges, is a useful measure because it enables investors
to discern our realized revenue after adjusting for the settlement of
derivative contracts.
The following table presents a reconciliation of the IFRS Financial measure of
Total Revenue to the Non-IFRS measure of Total Revenue, Inclusive of Settled
Hedges and a calculation of Adjusted EBITDA Margin for each of the periods
listed:
Three Months Ended
(In thousands) September 30, 2025 September 30, 2024
Total revenue $ 388,722 $ 186,297
Net gain (loss) on commodity derivative instruments(1) 41,505 52,749
Total revenue, inclusive of settled hedges $ 430,227 $ 239,046
Adjusted EBITDA $ 286,066 $ 115,029
Adjusted EBITDA Margin 66 % 48 %
Adjusted EBITDA Margin, Exclusive Next Level Energy 66 % 49 %
(1) Net gain (loss) on commodity derivative settlements represents cash paid
or received on commodity derivative contracts. This excludes settlements on
foreign currency and interest rate derivatives, as well as the gain (loss) on
fair value adjustments for unsettled financial instruments for each of the
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