Diversified Energy Company today announced the following operations and trading update for the quarter ended September 30, 2024.

Delivering Reliable Results

• Recorded average 3Q24 production of 829 MMcfepd (138 Mboepd)

  • September 2024 exit rate of 851 MMcfepd (142 Mboepd)

• Operating Cash Flow of $102 million, and Net loss of $1 million inclusive of non-cash unsettled derivative adjustments, and non-cash depreciation, depletion and amortization

• Achieved 3Q24 Adjusted EBITDA(a) of $115 million and Free Cash Flow(b) of $47 million

• Realized 49% 3Q24 Adjusted EBITDA Margin(a) and TTM Free Cash Flow Yield(b) of 32%

  • 3Q24 Total Revenue, Inclusive of Settled Hedges per Unit(c) of $3.23/Mcfe ($19.38/Boe)

  • 3Q24 Adjusted Operating Cost per Unit(d) of $1.71/Mcfe ($10.23/Boe)

• Reaffirmed credit facility borrowing base at $385 million with $102 million of undrawn capacity and unrestricted cash

Revenue Growth Initiatives

• Announced fixed-price contract for gas delivery to a major Gulf Coast LNG export facility

• Generated ~ $23 million year-to-date in cash flow through divestiture of undeveloped leasehold

• Expansion into adjacent market of Coal Mine Methane ("CMM") capture and environmental credit sales generating $8 to $10 million of EBITDA in 2024

Executing Strategic Objectives

• Retired $154 million debt principal through amortizing debt payments, year-to-date

• Declared 3Q24 dividend of $0.29 cents per share

• Repurchased ~1.4 million shares in 2024, representing ~$20 million of share buybacks(e)

• Completed previously announced acquisitions of Crescent Pass Energy and East Texas assets

  • Combined with Oaktree Working Interest Acquisition, offsets ~2 years of declines(f)

Next LVL Milestones

• The Company has retired a total of 165 operated wells, year-to-date and is on track to meet or exceed Diversified's stated goal of retiring 200 wells within its Appalachian footprint in 2024

  • Next LVL Energy completed 233 well retirements through September 2024, including 68 wells associated with orphan wells and third-party operators

Rusty Hutson, Jr., CEO of Diversified, commented:
"Our results this quarter demonstrate the underlying strength of our business to deliver consistent cash flow and our commitment to operational excellence. Year-to-date, we have announced $85 million in dividend payments, retired $154 million in outstanding debt principal, and executed over $20 million in share repurchases. We continue to remain on-track with the integration of the three acquisitions we have made this year and believe we have put in place an operational infrastructure platform that has the ability to significantly expand our business within our core operating areas without any meaningful increase in corporate G&A expense. This scalable and capable platform is a valuable advantage for our growth strategy.

Strong financial and operational performance during the third quarter, supported by our strategic hedging program positions which provided hedge protection of $53 million in the quarter and $130 million, year-to-date, and acquisition-related synergies, provide momentum heading into the remainder of the year. Looking ahead, we expect continued strong performance across our operations and we are well positioned for additional opportunities to add to the diversity of revenue generation streams, including robust undeveloped land sales, additional LNG agreements, and our expansion into adjacent markets of non-traditional operations, notably, Coal Mine Methane capture and sale of environmental credits.

We continue to execute on our long-term strategic plan - investing in the growth of our core business, driving operational excellence, and maintaining a disciplined approach to allocating capital to foster the strengthening of the balance sheet and create shareholder value. As we continue to scale our company, we remain focused on operating safely, reliably and in an environmentally responsible manner, and that as the Right Company at the Right Time we can help provide the essential energy to our communities, country, and the world that is needed today and into the future."

Operations and Finance Update

Production
The Company recorded exit rate production in September2024 of 851 MMcfepd (142 Mboepd) and delivered 3Q24 average net daily production of 829 MMcfepd (138 Mboepd). Net daily production for the quarter continued to benefit from Diversified's peer-leading, shallow decline profile and the addition of the recently closed Crescent Pass Energy acquisition.

The production for the quarter reflects contributions from two of the three acquisitions announced during 2024, and average production for the period represents an approximate 14% increase in volumes compared to the adjusted 4Q23 average of 725 MMcfepd (121 Mboepd), inclusive the impact of the ABSVII Asset Sale transaction(f).

Consistent with previous announcements, Diversified expects the recently completed acquisition of the East Texas assets to contribute additional production volumes of approximately 21 MMcfepd (4 Mboepd).

Margin and Total Cash Expenses per Unit
Diversified's delivered 3Q24 per unit revenues of $3.23/Mcfe ($19.38/Boe) that substantially benefited from the Company's disciplined hedging strategy, with settled natural gas hedge floors of $3.34/MMBtu exceeding the average NYMEX settlements by 55% during the quarter.

Divestitures of undeveloped leasehold acreage continued to supplement Diversified's organic cash generation, with ~$9 million of cash proceeds during the quarter and year-to-date cash proceeds of ~$23 million.

Adjusted EBITDA Margins(a) of 49% (33% unhedged) incorporate the Company's per unit revenues and reflect ongoing decreases in commodity-price linked expenses that are offset by production-related changes to per-unit Lease Operating Expense and Midstream Expense. General and Administrative expenses remained relatively consistent with prior period levels.

KeyFacts Energy Industry Directory: Diversified Energy