Diversified Energy Company PLC Q2 FY2025 earnings call

• Maverick Natural Resources acquisition has driven growth in EBITDA and cash flow, with synergy run rate raised to approximately $60 million. - Capital allocation strategy focused on systematic debt reduction, returning capital to shareholders, and growing cash-generating assets; $130 million in debt principal reduction and $105 million returned to shareholders in the first half of 2025. - JV partnership in the Western Anadarko Basin with ~60% rate of return on new wells, offsetting 10% annual corporate production decline. - Portfolio optimization generated approximately $70 million in additional cash proceeds. - Strong liquidity with ~$420 million, providing flexibility to navigate market cycles.

Production: Daily production exit rate for June was approximately 1.14 Bcf per day, with quarterly production averaging over 1.15 Bcf per day, and ~65% of produced volumes generated in the Central region. Revenue: Total revenue for the second quarter was approximately $510 million. Adjusted EBITDA: Second quarter adjusted EBITDA was $280 million, with first half 2025 adjusted EBITDA at $418 million and a second quarter adjusted EBITDA margin of 63%. Free Cash Flow: The quarter's free cash flow was $88 million, burdened with approximately $25 million of nonrecurring transaction-related costs. Debt: Net debt stood at approximately $2.6 billion for the quarter, with improved overall leverage by 10%. Reserves: Total proved reserves increased by 65% since year-end 2024.

• Targeted run rate synergies raised to approximately $60 million. - Confident in executing for the balance of 2025, with momentum continuing into the second half. - Committed to returning capital to shareholders and building a resilient portfolio of cash-generating assets.

• Acknowledged increased volatility from tariffs, geopolitical disturbances, but management does not see a material impact on Diversified's fundamental business.

Q: On the Oklahoma JV, how does it fit into the core portfolio and expansion opportunities?

A: It's a steady-as-you-go program in Oklahoma, with potential to expand in other basins like the Permian.

Q: On the Carlyle JV, deal procurement discussions?

A: Evaluating opportunities consistently with Carlyle, disciplined in approach to get best value.

Q: On land sales and full-year guidance?

A: Higher realizations and additional interest in the Western Anadarko Basin, with more opportunities in the Permian under review.

Q: On well retirements?

A: Plugged over 1,100 wells in recent years, on track to plug ~400 wells in 2025.

Q: On the AI data center theme and Appalachia?

A: Impact on pricing through increased natural gas demand, potential for small-scale participation.

Q: On synergy capture delta?

A: Initial estimates ~$50 million, now ~$60 million due to additional opportunities found.

Q: On footprint expansion and optimization?

A: Portfolio review ongoing, looking at all acreage positions for value creation.

Q: On JV offsetting corporate decline?

A: Material production next year, more color to come, will help offset decline.