Diversified Energy reports Q2 2026 results, expands Oklahoma development program

Diversified Energy Company (NYSE: DEC, LON:DEC) has announced its financial and operational results for the three and six months ended June 30, 2026.

Recent Highlights

• Closing of Camino Acquisition: Expansion in Oklahoma through the Camino acquisition, a bolt-on to our contiguous operating position with meaningful identified synergies and upside from large undeveloped inventory.
• Operated Development Program: Building on our proven acquisition and asset optimization model, DEC is expanding its value creation strategy through a disciplined one-rig operated development program focused on generating high-return organic cash flow growth from our high-quality, drill-ready inventory in Oklahoma.
• Portfolio Optimization: Completed the strategic sale of non-core, low-margin Barnett and Arkansas assets for $147M, enhancing corporate profitability and strengthening near-term adjusted free cash flow. Additionally, year-to-date acreage sales have reached $126M.
• Shareholder Returns:   Diversified’s cash generative, differentiated business model has allowed for year to date returns of ~$136M to shareholders, including $93M in share repurchases, representing a 14% shareholder return yield

Second Quarter 2026 Results

• Average production: 1,253 MMcfepd (209 Mboepd)
• Production exit rate^(a): 1,275 MMcfepd (213 Mboepd)
• Total Commodity Revenue: $504M
• Net Income: $248M, inclusive of gain on non-cash unsettled derivatives
• Adjusted EBITDA^(b): $240M 
• Operating Cash Flow: $89M 
• Adjusted Free Cash Flow^(c): $115M
• Capital Expenditures: $40M 
  

Rusty Hutson, Jr., CEO of Diversified, commented: 

“The Diversified team delivered another quarter of strong operational and financial performance, while maintaining our disciplined approach to capital allocation. Our differentiated business model continues to generate consistent and reliable cash flow, enabling us to strengthen the balance sheet through debt reduction, return capital to shareholders through our dividend and share repurchase programs, and invest in high-return opportunities that support long-term value creation. Importantly, we ended the quarter with leverage within our targeted range and substantial liquidity available for deployment into future value generating opportunities, underscoring the resilience of our asset base and the consistency of our portfolio’s cash-generating capabilities.

As we look ahead, Diversified is entering a compelling new phase of growth. The successful integration of the Canvas and Sheridan acquisitions, along with the closing of the Camino transaction have further enhanced the scale, quality, and inventory depth of our portfolio, strengthening our position as a leading owner and operator of long-life energy assets. At the same time, we are expanding our value creation playbook through the introduction of a disciplined operated development program in Oklahoma. Our focus within this expansive set of development opportunities in Oklahoma is to add future reserves and new production, which we expect will enhance and grow our cash flow. With our new operated development program, we are complementing the success of our non-operated development partnerships, portfolio optimization initiatives, and strategic infrastructure investments to grow cash flow.

These complementary growth platforms provide greater flexibility in how we allocate capital, create shareholder value, and drive sustainable production and cash flow performance. With a premier acreage position, an extensive inventory of highly economic development opportunities, and multiple pathways to generate attractive returns, we are increasingly able to control our growth profile while reducing reliance on acquisitions alone to sustain long-term performance. We have never been better positioned to deliver durable cash flow, create long-term shareholder value, and build the foundation for the next 25 years of growth.”

Financial Strength and Shareholder Returns

• Liquidity: $678M of credit facility availability and unrestricted cash as of June 30, 2026
• ABS principal reduction: Retired $233M in outstanding debt under certain ABS notes in 1H26
• Leverage ratio^(d): 2.45x as of June 30, 2026
  • Consolidated debt consists of ~76% in deleveraging non-recourse ABS notes
• 2Q26 dividend: $0.29 per share declared
  

Strategic Execution and Transformational Growth

Adding to our Playbook: Operated Development Enhances Long-Term Cash Flow Durability

• Building on our proven acquisition and asset optimization model: Expanding value creation strategy through a disciplined operated development program that unlocks the value of our high-quality undeveloped acreage.
• Expanded significant Oklahoma footprint: Estimated more than 450 economic drilling locations at $65/Bbl oil and $3.25/MMBtu natural gas pricing, representing over 20 years of development runway at a one-rig pace. This inventory provides strong visibility into future production, reserves, and cash flow generation.
• Experienced execution team: Led by Chief Operating Officer Rick Gideon and internal development team. Leveraging acreage acquired primarily through PDP-focused transactions, DEC is positioned to generate attractive risk-adjusted returns through a measured, capital-disciplined development program that adds to Diversified’s already resilient and proven cash generating capabilities.
• Proven operations platform: Supported by Smarter Asset Management practices, a vertically integrated operating platform, and technology-enabled field operations, our strategy can be executed within a low-cost framework.
  

Non-Operated Development Platform Provides a Meaningful Driver of Capital-Efficient Growth

• Non-operated value creation: Serves as an important component of our strategy to unlock cash flow, providing capital-efficient production growth and attractive returns through partnerships with leading operators.
• Strategic partnerships: Continental Resources, Mewbourne, and a private Northwest Shelf operator provide diversified, capital-efficient exposure to high-return development opportunities across multiple core basins.
• Incremental production addition: Expected to offset approximately 50% of the Company’s portfolio production decline, representing an estimated average contribution of approximately 12,500 Boepd during 2026.
  

By combining operated and non-operated development opportunities with our proven acquisition and asset management expertise, Diversified has built a durable growth platform, capable of generating long-term shareholder value across commodity cycles.

Unlocking Value Through Portfolio Optimization: Strategic Divestitures Enhance Asset Quality and Financial Flexibility

• Sale of non-core Barnett Shale and Arkansas assets: Represents another successful step in Diversified’s Portfolio Optimization Program (“POP”), which is focused on high-grading the asset base, improving margins, enhancing liquidity, and reallocating capital toward higher-return opportunities. Since the beginning of 2023, Diversified has generated more than $500 million through acreage sales and asset divestitures, demonstrating the value and optionality embedded within our expansive portfolio.
  • Barnett Shale assets sale: Generated approximately $130 million in gross proceeds. The divested assets produced approximately 52 MMcfe/d and contributed approximately $13 million of annual EBITDA. The transaction added approximately $47 million of liquidity post fees, debt repayment, and hedge book termination and is expected to improve margins across our Central Region through the disposition of higher-cost production.
  • Sale of certain Arkansas assets: Generated approximately $17 million in gross proceeds. These assets produced approximately 2 MMcfe/d and contributed approximately $2 million of annual EBITDA.
    

These recent transactions further sharpen our operational focus while reinforcing our commitment to disciplined capital allocation. Collectively, we will continue to evaluate and high-grade our assets from our vast portfolio optimization program opportunities that enhance the durability of our business model and support DEC’s evolution into a premier U.S. energy producer focused on creating long-term shareholder value.

Operations and Finance Update 

Second Quarter Production 

The Company recorded exit rate production as of June 30, 2026 of 1,275 MMcfepd (213 Mboepd)^(a) and delivered average daily production of 1,253 MMcfepd (209 Mboepd) for the three months ended June 30, 2026. The Company’s production volume mix was approximately 71% natural gas, 15% natural gas liquids (“NGLs”), and 14% oil, with approximately 66% of production volumes from the Central region and 34% from Appalachia for the three months ended June 30, 2026. Production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.

Year-to-Date Production 

The Company recorded average daily production of 1,225 MMcfepd (204 Mboepd) for the six months ended June 30, 2026. The Company’s production volume mix was approximately 71% natural gas, 15% NGL’s, and 14% oil.

Second Quarter Margin and Total Cash Expenses per Unit 

For the three months ended June 30, 2026, Diversified delivered per unit revenues of $4.22/Mcfe^(e) ($25.32/Boe) and Adjusted EBITDA Margin^(b) of 52%. The Company’s per unit expenses are anticipated to improve as the Company continues to implement its playbook to achieve long-term, sustainable synergies and cost savings. For example, Midstream and Transportation expenses decreased during the three months ended June 30, 2026 compared to prior period levels, supporting our progress on cost savings and synergy capture while also highlighting our ability to profitably add assets due to our scale and existing capabilities. 

Year-to-Date Margin and Total Cash Expenses per Unit 

For the six months ended June 30, 2026, Diversified delivered per unit revenues of $4.54/Mcfe^(e) ($27.24/Boe) and Adjusted EBITDA Margin^((b) of 60%.

(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 percent of Total Revenue, Inclusive of derivatives settled in cash

Share Repurchase Program 

• 2Q26 (through August 5, 2026): Repurchased 1,563,389^(f) shares, representing ~2% of shares outstanding
• YTD (through August 5, 2026): Repurchased 6,596,753^(f) shares, representing ~9% of shares outstanding

Updated 2026 Outlook

The Company is providing an update to its previously announced Full Year 2026 guidance. Following the recently completed acquisitions and divestitures, Diversified expects to realize continued significant operational synergies associated with a larger, consolidated position in Oklahoma. With the recently closed Camino transaction and associated minority ownership in the Special Purpose Vehicle (“SPV”), the Company will guide to the Income from equity affiliates, based upon equity method accounting treatment, to better model EBITDA and Free Cash Flow.

Additionally, the Company intends to expand its capital expenditure program to include an operated development program beginning in the second half of 2026, with the expectation of a material impact on production results in 2027. The Company will continue to provide cash generation from its portfolio optimization program and continue to improve the overall cost structure of its established producing assets while prioritizing returns and Free Cash Flow generation.

The updated guidance metrics for the Full Year 2026 are outlined in the table below:

⁽¹⁾   Includes an estimate of cash proceeds for FY 2026 asset optimization of ~$135 million; based on July 2026 strip prices. Excludes changes in cash from working capital. 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.

⁽²⁾   Income from equity affiliates included in Adjusted EBITDA and Adjusted Free Cash Flow

Conference Call Details

The Company will host a conference call Thursday, August 6, 2026, at 8:30 AM ET to discuss the second quarter 2026 results and will make an audio replay of the event available shortly thereafter.

Footnotes:

(a) Exit rate includes full month of June 2026 production. (b) Adjusted EBITDA represents earnings before interest, taxes, depletion, depreciation 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 June 30, 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 $3M in 2Q26 and $3M in 2Q25, and Lease Operating Expense of $6M in 2Q26 and $4M in 2Q25 associated with Diversified’s wholly owned plugging subsidiary, Next Level Energy. (f) Includes total share repurchases (including by the Employee Benefit Trust) from January 1, 2026 through August 5, 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.