Half-year Results

Delivering Reliable Production with Low Capital Intensity, Sequential Cost Improvement and Consistent Cash Margins

Diversified Energy Company PLC (LSE: DEC) is pleased to announce it is trading in line with expectations and provides its Interim Results for the six months ended June 30, 2024 and other recent highlights.

Delivering Reliable Results

Average net daily production: 746 MMcfepd (124 Mboepd);

◦ Reflects effectively flat production volumes since 4Q2023, on a normalized basis(a)

◦ June 2024 exit rate of 855 MMcfepd (143 Mboepd), including the impact of the Oaktree Acquisition

• Net Income of $16 million, inclusive of approximately $98 million in tax benefits
• 1H24 Adjusted EBITDA(b) of $218 million

◦ 1H24 Adjusted EBITDA Margin(c) of 50%

◦ 1H24 Adjusted Cost per Unit(d) of $1.68/Mcfe ($10.08/Boe)

• Free Cash Flow of $121 million, excluding the impact of working capital(e)

◦ Annualized Free Cash Flow Yield (excl. working capital) of 38%(e)

• Leverage ratio of ~2.8x(f), excluding Oaktree transaction, leverage ratio of 2.6x(g)
• Undrawn credit facility capacity and unrestricted cash of ~$120 million

Executing Strategic Objectives and Achieving Milestones

Accretive Acquisitions:

◦ Announced $516 million (gross) of high-margin, low-decline asset and working interest acquisitions

◦ Includes the $410 million acquisition of Oaktree working interests and $106 million for assets to be acquired from Crescent Pass

Sustainable Capital Return:

◦ Declared 2Q24 interim dividend of $0.29 per share

◦ Paid $55 million of dividends 1H24 and returned a total of $65 million, including share repurchases of ~2% of shares outstanding(i)

Systematic Debt Reduction:

◦ Reduced amortizing debt principal by $108 million

Recent Milestones:

◦ Included in the US Russell 2000 Index, adding to daily trading liquidity and US shareholder base

◦ Permanently retired 169 wells in Appalachia, including 135 Diversified wells (70% of 2024 goal)

◦ Realized ~$15 million of upside value through the divestiture of non-core assets and leasehold sales(h)

Commenting on the results, CEO Rusty Hutson, Jr. said:

"Building a portfolio of high-performing assets with dedicated teams of experienced professionals has been part of our strategic vision since the Company went public, and we have continued our track record of delivering on that vision with two recent announcements: the closing of our Oaktree acquisition and the pending Crescent Pass acquisition. The outstanding results presented, both operationally and financially, reinforce the success of this strategy. Our ability to drive the 3% cost structure improvement during the first half of 2024 is enhanced by further scale and vertical integration, allowing us to once again deliver approximately 50% Adjusted EBITDA margins and consistent free cash flow generation. This strategic vision has proven highly successful, but it's our employees' commitment to operational excellence in the field and the corporate office that has helped Diversified achieve these results. We remain committed to our balanced capital allocation framework, with the diversity and strength of our asset base providing a solid foundation for accretive growth and value creation for our shareholders, while maintaining our position as the Right Company at the Right Time to responsibly manage long-life, mature producing assets."

Posting of 2024 Interim Results Report and Presentation

Diversified has published the Company's 2024 Interim Report on its website at https://ir.div.energy/financial-info and has also made available a supplementary 2024 Interim Results Presentation at https://ir.div.energy/presentations.

Conference Call

Diversified Energy will host a conference call today to discuss the Company's Interim Results at 2:00pm BST (9:00am EDT) along with these results. The conference call details are as follows:

For Company-specific items, refer to the Glossary of Terms and/or Alternative Performance Measures found in the Company's 2024 Interim Report

Use of Non-IFRS Measures

Adjusted EBITDA

Adjusted EBITDA should not be considered in isolation or as a substitute for operating profit or loss, net income or loss, or cash flows provided by operating, investing, and financing activities. However, we believe such a measure is useful to an investor in evaluating our financial performance because it (1) is widely used by investors in the natural gas and oil industry as an indicator of underlying business performance; (2) helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the often-volatile revenue impact of changes in the fair value of derivative instruments prior to settlement; (3) is used in the calculation of a key metric in one of our Credit Facility financial covenants; and (4) is used by us as a performance measure in determining executive compensation. When evaluating this measure, we believe investors also commonly find it useful to evaluate this metric as a percentage of our total revenue, inclusive of settled hedges, producing what we refer to as our adjusted EBITDA margin.

Six Months Ended

• Excludes $0.5 million in dividend distributions received for our investment in DP Lion Equity Holdco during the six months ended June 30, 2024.
• Excludes $7.5 million, $6.8 million and $17.3 million in proceeds received for leasehold sales during the six months ended June 30, 2024, June 30, 2023 and December 31, 2023.
• For the year ended December 31, 2023, the Group determined the carrying amounts of certain proved properties within two fields were not recoverable from future cash flows, and therefore, were impaired.
• Other adjusting costs for the six months ended June 30, 2024 primarily consisted of expenses associated with an unused firm transportation agreement and legal and professional fees. Other adjusting costs for the six months ended June 30, 2023 primarily consisted of expenses associated with an unused firm transportation agreement and legal and professional fees related to internal audit and financial reporting. Other adjusting costs for the six months ended December 31, 2023 primarily consisted of legal and professional fees related to the U.S. listing, legal fees for certain litigation, and expenses associated with unused firm transportation agreements.

Net Debt and Net Debt-to-Adjusted EBITDA

As used herein, net debt represents total debt as recognized on the balance sheet less cash and restricted cash. Total debt includes our borrowings under the Credit Facility and borrowings under or issuances of, as applicable, our subsidiaries' securitization facilities. We believe net debt is a useful indicator of our leverage and capital structure.

The following table presents a reconciliation of the IFRS Financial measure of Total Borrowings to the Non-IFRS measure of Net Debt and a calculation of Net Debt-to-Adjusted EBITDA and Net Debt-to-Pro Forma Adjusted EBITDA for each of the periods listed:

As of

• Includes $133 million for the assumption of Oaktree's proportionate share of the ABS VI debt as part of the Oaktree transaction as of June 30, 2024. Refer to Note 4 in the Notes to the Interim Condensed Consolidated Financial Statements for additional information regarding the Oaktree transaction.
• Includes $83 million in notes payable issued as part of the consideration in the Oaktree transaction as of June 30, 2024. Refer to Note 4 in the Notes to the Interim Condensed Consolidated Financial Statements for additional information regarding the Oaktree transaction.
• Includes $28 million and $3 million in restricted cash attributable to the ABS VIII Notes and ABS Warehouse Facility, respectively, offset by $7 million and $8 million attributable to the retirement of the ABS III Notes and ABS V Notes, respectively.
• Pro forma TTM adjusted EBITDA includes adjustments for the trailing twelve months ended June 30, 2024 for the Oaktree transaction to pro forma its results for a full twelve months of operations. Similar adjustments were made for the trailing twelve months ended June 30, 2023 for the Tanos II and ConocoPhillips acquisitions as well as in the trailing twelve months ended December 31, 2023 for the Tanos II Acquisition.
• Does not include adjustments for working capital which are often customary in the market.
• Excludes $266 million of net consideration for the Oaktree transaction and the assumption of Oaktree's proportionate ABS debt, as well as the pro forma impact of the unrealized impact of estimated NTM adjusted EBITDA for the Oaktree transaction

Free Cash Flow

Six Months Ended

Total Revenue, Inclusive of Settled Hedges and Adjusted EBITDA Margin

Six Months Ended

• Net gain (loss) on commodity derivative settlements represents cash (paid) or received on commodity derivative contracts. This excludes settlements on foreign currency and interest rate derivatives as well as the gain (loss) on fair value adjustments for unsettled financial instruments for each of the periods presented.
• As adjusted, excludes revenues of $8 million and operating costs of $9 million for the six months ended June 30, 2024, revenues of $17 million and operating costs of $12 million for the six months ended December 31, 2023 and revenues of $12 million and operating costs of $10 million for the six months ended June 30, 2023.

Adjusted Operating Cost per Mcfe

Adjusted operating cost per Mcfe is a metric that allows us to measure the direct operating cost and the portion of general and administrative cost it takes to produce each Mcfe. This metric, similar to adjusted EBITDA margin, includes operating expense employees, administrative costs and professional services and recurring allowance for credit losses, which include fixed and variable cost components.

Employees, Administrative Costs & Professional Services

As used herein, employees, administrative costs and professional services represents total administrative expenses excluding costs associated with acquisitions, other adjusting costs and non-cash expenses. We use employees, administrative costs and professional services because this measure excludes items that affect the comparability of results or that are not indicative of trends in the ongoing business.

The following table presents a reconciliation of the IFRS Financial measure of Total Operating Expense to the Non-IFRS measure of Adjusted Operating Cost per Mcfe and Adjusted Cost per Unit, excluding the impact of Next LVL Energy for each of the periods listed:

Six Months Ended