Diversified Energy Company PLC Q1 FY2026 earnings call

1. The company has been in operation for 25 years, returned approximately $1.2 billion to shareholders in dividends and share repurchases since IPO, grown EBITDA per share at a 12% compounded annual growth rate over the last five years, controls over 1,000 Oklahoma undeveloped drilling locations, over 38,000 miles of midstream pipeline, operations in four distinct basins including high-quality Permian assets, and has a daily production platform of over 1.2 BCF per day. 2. It has a true operating platform which is technology driven, vertically integrated, continuously improving system. 3. The company has options regarding operational activity such as acreage sales, JVs with other partners, or adding a rig itself, with 1,000 locations in Oklahoma, 450 of which are highly economic at $65 oil. 4. Rick Gideon and his team from the Maverick acquisition have helped in the POP program and extracting value from assets. 5. The partnership with Carlisle is an off-balance sheet, non-dilutive structure attractive for future acquisitions. 6. The company has a track record of issuing ABS notes and tapping into equity value to grow the business. 7. The non-off JVs with Continental involve contributing acreage, receiving cash, and participating alongside Continental, with the contribution mostly in 2027. 8. The company has flexibility in capital return priorities based on what makes the most sense at the specific time, with debt reduction, dividends, share repurchases, and acquisitions all important but dependent on the moment.

1. The company sees a robust market for divestitures and the Carlisle structure is likely to be highly utilized for future acquisitions. 2. The $2 billion commitment with Carlisle is unlimited as they have capital and opportunities. 3. The company can bring back acquired assets onto the balance sheet in the future to provide future stability.

Q: On potential operational activity, what determines if and when to bring in a rig like on Camino's assets and other areas with optionality?

A: Look at alternatives, options include acreage sales, JVs, or adding a rig ourselves. We have 1,000 locations in Oklahoma, 450 highly economic at $65 oil, creating optionality.

Q: What metrics are used for actionable Oklahoma inventory and potential timing of development?

A: Underwritten at $65 oil, $375 gas, run through in-house engineering, not something to sit on for a year or two.

Q: About Camino SPV and ownership structure, is Diversified's undeveloped inventory owned by them and details of SPV?

A: Undeveloped inventory 100% owned by Diversified, SPV owns producing PDP wells, 60% Carlisle, 40% Diversified, not consolidated on balance sheet.

Q: On running an operated drilling program, what's the situation?

A: Three options - sell acreage, JV, or bring in a rig ourselves, evaluating which is most economically viable.

Q: On potential buyout of Carlisle's equity interest in Camino assets, how is timing driven?

A: No specific triggering moment, based on Diversified's right timing and need to grow the business, similar to ABS node characteristics.

Q: On non-off JVs with Continental, scope of JDA?

A: Just signed, Continental paid for 50% of acreage up front, participation going forward, contribution mostly in 2027.

Q: On funding acquisition for future acquisitions and partnership with Carlisle, how decide on off-balance sheet financing?

A: Larger deals likely with Carlisle structure, on-balance sheet for smaller bolt-ons, stacking such transactions can bring assets back on balance sheet.

Q: On capital return priorities ranking, how?

A: No strict ranking, based on what makes the most sense at specific time, debt reduction ongoing, dividends important, share repurchases opportunistic, acquisitions part of growth.

Q: On off-balance sheet SPV and return hurdles compared to on-balance sheet, difference?

A: On-balance sheet ties up ability to do more transactions in future, want to grow without dilution, Carlisle partnership is true partnership aligned on asset valuing.

Q: On what's driving more activity and opportunity in geography and preference?

A: Liquids more in focus due to oil price curve, still seeing gas but less than liquid side currently