Diversified Energy Company PLC (LON:DEC, NYSE: DEC) has announced the following operations and trading update for the quarter ended March 31, 2025.
Maintaining Momentum into Second Quarter 2025 and Remain on Track to Achieve Full Year 2025 Guidance
Closed Maverick Acquisition Continuing to Execute our Strategy as the PDP Champion
Returned Over $59 million to Shareholders Through Dividends and Repurchases Year to Date
**Consolidated operational & financial results for the quarter include only two weeks of Maverick Natural Resources (“Maverick”) contribution**
Executing Strategic Objectives
- Closed transformational and accretive acquisition of Maverick Natural Resources
- Approximately doubling revenues and free cash flow
- Strengthened balance sheet and increased liquidity
- Credit facility borrowing base of $900 million with $451 million of current undrawn capacity and unrestricted cash; current leverage ratio of ~2.7x
- Retired $51 million of debt principal through amortizing debt payments during Q1 2025
- Returned over $59 million year-to-date to shareholders through dividends and share repurchases(a)
- Declared 1Q25 dividend of $0.29 per share
- Repurchased ~1.5 million shares year-to-date in 2025, representing ~$19 million of share buybacks(a)
- Advantageously added natural gas hedge volumes in 2026 through 2029 during recent strength in forward curve
- On track to exceed $40 million in targeted land sales during the first half of 2025
- Realized additional Coal Mine Methane (CMM) alternative energy credits with acquired assets from Summit Natural Resources
- Next LvL Energy collaborated with the State of West Virginia regulatory agencies to modernize well retirement procedures using a method that is environmentally sound, safe, and cost-effective
Maverick Integration
- Full field level integration anticipated by the end of the second quarter with technology, and administrative integration anticipated by the end of the third quarter 2025
- On track to exceed the annualized synergy target of over $50 million
- High-graded staffing and reduced redundancies to capture efficiencies and cost savings
- Contract savings providing impacts in compression and chemicals
Delivering Reliable Results
- March 2025 exit rate of 1,149 MMcfepd (192 Mboepd)(b)
- Recorded average 1Q25 production of 864 MMcfepd (144 Mboepd)
- Total Revenue, inclusive of settled hedges, of $295 million
- Operating Cash Flow of $132 million, and Net loss of $337 million, inclusive of non-cash unsettled derivative adjustments
- Achieved 1Q25 Adjusted EBITDA(c) of $138 million and Free Cash Flow(d) of $62 million
- Realized 47% 1Q25 Adjusted EBITDA Margin(c)
- 1Q25 Total Revenue, Inclusive of Settled Hedges per Unit(e) of $3.78/Mcfe ($22.68/Boe)
- 1Q25 Adjusted Operating Cost per Unit(f) of $2.00/Mcfe ($12.01/Boe)
- Published the 5th annual Sustainability Report, “Winning Through Collaboration”
Rusty Hutson, Jr., CEO of Diversified Energy Company, commented:
“Diversified is off to a great start in 2025, demonstrating the resilience of our business model in an otherwise volatile business environment while advancing our long-term strategy with the transformational acquisition of Maverick Natural Resources. Despite the broader macroeconomic and geopolitical challenges, we delivered solid operational results and continued growth in free cash flow.
We remain committed to effectively allocating capital. Thus far this year, Diversified has returned over $59 million to our shareholders through dividends and share repurchases, while we continue to deleverage naturally from principal paydowns of our debt. We believe our shares remain a compelling investment at current levels, and we will continue to take advantage of the current cycle and market dislocation to opportunistically repurchase shares.
At the same time, we have strategically invested in growing our business with our Maverick acquisition. We are highly focused on integration across all operations and functions of the organization, using the disciplined and methodical playbook we have historically executed to drive synergies and cost-saving initiatives that should provide margin expansion over time. We fully expect to exceed our annualized synergy target of $50 million.
Despite the current uncertain environment, the Diversified team, with our ONE DEC culture, continues to perform at a high level. Diversified has a proven track record of managing through challenging markets. I am confident that with our highly strategic initiatives, we will capitalize on opportunities and emerge from the current market as an even stronger company, ensuring continued growth and success.”
Operations and Finance Update
Production
The Company recorded exit rate production in March 2025 of 1,149 MMcfepd (192 Mboepd)(b) and delivered 1Q25 average net daily production of 864 MMcfepd (144 Mboepd). Net daily production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.
The production for the quarter reflects the contribution of only two weeks of Maverick Natural Resources, which closed March 14th, 2025.
Margin and Total Cash Expenses per Unit
Diversified delivered 1Q25 per unit revenues of $3.78/Mcfe ($22.68/Boe) and Adjusted EBITDA Margin(a) of 47% (55% unhedged). Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids-related production of Maverick Natural Resources. 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 remained relatively consistent with prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture.
| 1Q25 | 1Q24 | |||||||||||||||
| $/Mcfe | $/Boe | $/Mcfe | $/Boe | % | ||||||||||||
| Average Realized Price(1) | $ | 3.78 | $ | 22.68 | $ | 3.25 | $ | 19.50 | 16 | % | ||||||
| 1Q25 | 1Q24 | |||||||||||||||
| Adjusted Operating Cost per Unit(f) | $/Mcfe | $/Boe | $/Mcfe | $/Boe | % | |||||||||||
| Lease Operating Expense(2) | $ | 0.92 | $ | 5.49 | $ | 0.65 | $ | 3.91 | 40 | % | ||||||
| Midstream Expense | $ | 0.23 | $ | 1.40 | $ | 0.27 | $ | 1.61 | (13 | )% | ||||||
| Gathering and Transportation | $ | 0.34 | $ | 2.06 | $ | 0.31 | $ | 1.85 | 11 | % | ||||||
| Production Taxes | $ | 0.21 | $ | 1.27 | $ | 0.12 | $ | 0.74 | 72 | % | ||||||
| Total Operating Expense(2) | $ | 1.70 | $ | 10.22 | $ | 1.35 | $ | 8.11 | 26 | % | ||||||
| Employees, Administrative Costs and Professional Fees(g) | $ | 0.30 | $ | 1.79 | $ | 0.33 | $ | 1.98 | (10 | )% | ||||||
| Adjusted Operating Cost per Unit(f)(2) | $ | 2.00 | $ | 12.01 | $ | 1.68 | $ | 10.09 | 19 | % | ||||||
| Adjusted EBITDA Margin(a) | 47 | % | 49 | % | ||||||||||||
(1) 1Q25 excludes $0.04/Mcfe ($0.24/Boe) and 1Q24 excludes $0.05/Mcfe ($0.36/Boe) of other revenues generated by Next LVL Energy.
(2) 1Q25 excludes $0.03/Mcfe ($0.22/Boe) and 1Q24 excludes $0.07/Mcfe ($0.39/Boe) of expenses attributable to Next LVL Energy.
Values may not sum due to rounding.
Opportunistic Layering of Additional Hedges at Premium Contract Prices
Diversified has strategically taken advantage of the recent strength of the natural gas price curve to add to the Company’s 2026-2029 hedge portfolio and layering additional NYMEX volumes at an average floor price of ~$3.68/MMBtu, which is reflected in the financial derivatives positions as of April 30, 2025.
Environmental Update
Asset Retirement Progress and Next LVL Energy Update
Next LvL Energy partnered with the State of West Virginia regulatory agencies to implement advanced testing protocols and improved technology to help modernize and upgrade well retirement procedures. Through the combined efforts of real-world situation testing and oversight, the State of West Virginia has enacted new asset retirement regulations, with the resulting framework achieving an environmentally sound, safe, and cost-effective methodology.
Through the end of the first quarter, the Company has retired a combined 76 wells consisting of operated assets, state well retirements, and contracted retirement activity for third-party operators. Diversified is well-positioned to meet or exceed its retirement goal of 200 wells per year, with 57 operated wells retired as of March 31, 2025. The Company continues to drive stakeholder value via the realization of contractual partnerships to retire assets that eliminate orphaned or abandoned wells in our region and provide revenue to offset the cash costs associated with the retirement of Diversified’s wells.
Combined Company 2025 Outlook
The Company is reiterating its previously announced Full Year 2025 guidance. 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 assets while continuing to prioritize returns and Free Cash Flow generation.
The following outlook incorporates a nine-month contribution from the recently acquired Maverick assets.
| 2025 Guidance | |
| Total Production (Mmcfe/d) | 1,050 to 1,100 |
| % Liquids | ~25% |
| % Natural Gas | ~75% |
| Total Capital Expenditures (millions) | $165 to $185 |
| Adj. EBITDA(1) (millions) | $825 to $875 |
| Adj. Free Cash Flow(1) (millions) | ~$420 |
| Leverage Target | 2.0x to 2.5x |
| Combined Company Synergies (millions) | >$50 |
(1) Includes the value of anticipated cash proceeds for 2025 land sales.
Conference Call Details
The Company will host a conference call today, Monday, May 12, 2025, at 1:00 PM GMT (8:00 AM EDT) to discuss the 1Q25 Trading Statement and will make an audio replay of the event available shortly thereafter.
| US (toll-free) | +1 877 836 0271 |
| 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) | Includes the total value of dividends paid and declared, and share repurchases (including Employee Benefit Trust) year-to-date, through May 12, 2025. |
| (b) | Exit rate includes full month of March 2025 production from Maverick. |
| (c) | 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 Settled Hedges; For purposes of comparability, Adjusted EBITDA Margin excludes Other Revenue of $3 million in 1Q25 and $3 million in 1Q24, and Lease Operating Expense of $3 million in 1Q25 and $4 million in 1Q24 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy; For more information, please refer to the Non-IFRS reconciliations as set out 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; For more information, please refer to the Non-IFRS reconciliations as set out below. |
| (e) | Includes the impact of derivatives settled in cash; For purposes of comparability, excludes certain amounts related to Diversified’s wholly owned plugging subsidiary, Next LVL Energy. |
| (f) | 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. |
| (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. |
For Company-specific items, refer also to the Glossary of Terms and/or Alternative Performance Measures found in Diversified Energy Company’s Annual Report and Form 20-F for the year ended December 31, 2024 filed with the United States Securities and Exchange Commission and available on the Company’s website.
