First Quarter and Recent Highlights
Camino Natural Resources Acquisition: Innovative Carlyle acquisition financing structure utilized for joint acquisition of $1.175B Oklahoma asset, further expanding the Company's leading Oklahoma operations
Closing of Sheridan Acquisition: Acquisition closed on April 30th, adding ~62 MMcfepd of production and ~$52M of NTM EBITDA contiguous to our portfolio of assets in East Texas
Shareholder Returns: Returned $94M to shareholders in 1Q26, including $72M in share repurchases in conjunction with the full exit of EIG, the former primary owner of Maverick Natural Resources
Portfolio Optimization: Recorded over $100M in proceeds from optimization activities in 1Q26, further extending the Company's ability to generate material free cash flow from its extensive portfolio of assets
Expanded Non-Op Portfolio: Expanded to three non-op partnerships with leading operators, including Mewbourne (Anadarko Basin) and Continental Resources (Permian Basin), positioning the Company to increase future production and reserves from highly profitable new wells
First Quarter 2026 Results
Average production: 1,198 MMcfepd (200 Mboepd)
Production exit rate(a): 1,228 MMcfepd (205 Mboepd)
Total Commodity Revenue: $556M
Net Loss: $161M, inclusive of $398M loss on non-cash unsettled derivatives
Adjusted EBITDA(b): $287M
Operating Cash Flow: $169M
Adjusted Free Cash Flow(c): $160M after $11M of transaction costs
Capital Expenditures: $58M
Rusty Hutson, Jr., CEO of Diversified, commented:
"We are off to a terrific start in our 25th year of business. In this year of celebration and reflection of our history, I am very pleased that our teams started 2026 by delivering another strong quarterly performance, and were able to produce year-over year adjusted free cash flow growth of 157%, while managing through a quarter that saw Winter Storm Fern and the war in Iran creating challenging operating conditions and nearly unprecedented commodity price volatility. Importantly, the robust cash flow generated by reliable production of our assets allowed us to further strengthen the balance sheet through $92 million of systematic debt reduction, returned $94 million to shareholders through a combination of dividends and share repurchases, and deployed capital into two strategic acquisitions.
Looking ahead, I am incredibly excited about the future of Diversified Energy. With the Sheridan acquisition recently closed and the innovatively structured Camino acquisition, with our partners at The Carlyle Group, expected to close in the third quarter, we are once again transforming our platform and enhancing our long‑term positioning as the leading consolidator of cash-generating energy assets in the US. On a pro forma basis, these transactions increase our cash flow and expand our vast acreage position, creating significant optionality within our portfolio optimization program. Our scale positions Diversified to benefit from powerful, long‑term demand drivers, including power generation, data center growth, LNG exports, and the continued importance of U.S. energy production amid global geopolitical uncertainty. As the largest individual shareholder in Diversified Energy, I believe our differentiated and proven business model, expanded footprint, culture of focused execution, and our ability to generate consistent free cash flow position us better than ever before to capitalize on these trends and drive sustainable, long‑term shareholder value."
Financial and Operational Metrics
Three Months Ended
March 31, 2026
March 31, 2025
1Q/1Q % Change
December 31, 2025
1Q/4Q % Change
Production (Mmcfe/d)
1,198
864
39%
1,198
0%
Production volume mix
Natural gas
71%
82%
72%
NGLs
14%
12%
14%
Oil
15%
6%
14%
Total Commodity Revenue (millions)
$556
$329
69%
$429
30%
Net Income (Loss) (millions)
$(161)
$(323)
50%
$196
(182)%
Adj. EBITDA(b) (millions)
$287
$138
108%
$254
13%
Adj. Free Cash Flow(c) (millions)
$160
$62
157%
$130
23%
Financial Strength and Shareholder Returns
Liquidity: $529M of credit facility availability and unrestricted cash as of March 31, 2026
ABS principal reduction: Retired $92M in outstanding debt under certain ABS notes
Leverage ratio(d): 2.2x as of March 31, 2026;
Consolidated debt consists of ~72% in deleveraging non-recourse ABS notes
1Q26 dividend: $0.29 per share declared
Strategic Execution and Transformational Growth
Camino Natural Resources: Carlyle Partnership in full-force, with joint acquisition of $1.175B Oklahoma asset
Innovative acquisition financing structure that drives enhanced returns for shareholders and bolsters the continuation of long-term growth
Non-Op Platform Continues to Provide Additional Lever for Value Generation
Continental Resources Permian Basin joint development program bolsters Non-Op platform alongside Mewbourne JDA in Oklahoma and private operator JDA in the Northwest Shelf
Oklahoma Joint Development Partnership continues to generate an estimated 60% IRRs with ~135 wells drilled under the JDA in the last 3 years, with ~160 wells remaining in JDA inventory
Non-Op development efficiently adds incremental production that offsets an estimated ~50% of natural decline (2026 estimated avg. ~10,800 Boepd) annually across three partnerships
DEC Oklahoma inventory includes 450 economic locations pro forma for Camino
Unlocking Value Through Portfolio Optimization
Our Portfolio Optimization Program ("POP") realized over $100M from non-core asset and leasehold divestitures
Our POP highlights optionality in DEC's expansive and diverse portfolio to monetize our acreage position via Non-Op Partnerships or leasehold divestitures
Generated ~$3M of cash flow from environmental credits related to Coal Mine Methane (CMM) in 1Q26
Operations and Finance Update
First Quarter Production
The Company recorded exit rate production as of March 31, 2026 of 1,228 MMcfepd (205 Mboepd)(a) and delivered average daily production of 1,198 MMcfepd (200 Mboepd) for the three months ended March 31, 2026. The Company's production volume mix was approximately 71% natural gas, 14% natural gas liquids ("NGLs"), and 15% oil, with approximately 66% of production volumes from the Central region and 34% from Appalachia for the three months ended March 31, 2026. Production for the quarter continued to benefit from Diversified's peer-leading, shallow decline profile.
First Quarter Margin and Total Cash Expenses per Unit
For the three months ended March 31, 2026, Diversified delivered per unit revenues of $4.87/Mcfe(e) ($29.22/Boe) and Adjusted EBITDA Margin(b) of 68%. Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids production following the 2025 Maverick Natural Resources & Canvas Energy acquisitions. 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 decreased during the three months ended March 31, 2026 compared to prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture and highlighting our ability to profitability add assets due to our scale and existing capabilities.
Three Months Ended
March 31, 2026
March 31, 2025
December 31, 2025
$/Mcfe
$/Boe
$/Mcfe
$/Boe
$/Mcfe
$/Boe
Average realized price(1)
$
3.76
$
22.56
$
3.57
$
21.42
$
4.08
$
24.48
Other revenue(2)(e)
0.17
1.02
0.19
1.14
0.12
0.72
Proceeds from divestitures(3)
0.94
5.64
0.03
0.18
0.15
0.90
Total revenue and proceeds from divestitures, excluding Next Level Energy(4)
$
4.87
$
29.22
$
3.79
$
22.74
$
4.35
$
26.10
Lease operating expense(5)(e)
$
1.19
$
7.14
$
0.91
$
5.46
$
1.12
$
6.72
Production taxes
0.28
1.68
0.21
1.26
0.21
1.26
Midstream operating expense
0.19
1.14
0.24
1.44
0.18
1.08
Transportation expense
0.26
1.56
0.34
2.04
0.22
1.32
Total operating expense(6)
$
1.92
$
11.52
$
1.70
$
10.20
$
1.73
$
10.38
Employees, administrative costs and professional fees(7)
0.25
1.50
0.30
1.80
0.29
