Diversified Energy Reports Strong First Quarter 2025 Results Driven by Increased Top-Line Revenue Generation and Operational Discipline
Q1 2025 results showing revenue of $295m and Adjusted EBITDA of $138m following Maverick acquisition close.
- Total Revenue (Q1 2025) $295 million
- Adjusted EBITDA (Q1 2025) $138 million
- Free Cash Flow (Q1 2025) $62 million
- Exit rate production (March 2025) 1,149 MMcfepd (192 Mboepd)
- Average revenue per unit (Q1 2025) $3.78/Mcfe ($22.68/Boe) (prior $3.25/Mcfe ($19.50/Boe))
- Shareholder returns year-to-date $59 million
Select text to share a quote on X · sign in to keep highlights & notes in your DEC notes
Returned Over $59 million to Shareholders Through Dividends and Repurchases Year to Date
BIRMINGHAM, Ala., May 12, 2025 (GLOBE NEWSWIRE) -- Diversified Energy Company PLC (LSE: DEC, NYSE: DEC) is pleased to announce the following operations and trading update for the quarter ended March 31, 2025.
**Consolidated operational & financial results for the quarter include only two weeks of Maverick Natural Resources (“Maverick”) contribution**
Executing Strategic Objectives
Closed transformational and accretive acquisition of Maverick Natural Resources
Approximately doubling revenues and free cash flow
Strengthened balance sheet and increased liquidity
Credit facility borrowing base of $900 million with $451 million of current undrawn capacity and unrestricted cash; current leverage ratio of ~2.7x
Retired $51 million of debt principal through amortizing debt payments during Q1 2025
Returned over $59 million year-to-date to shareholders through dividends and share repurchases(a)
Declared 1Q25 dividend of $0.29 per share
Repurchased ~1.5 million shares year-to-date in 2025, representing ~$19 million of share buybacks(a)
Advantageously added natural gas hedge volumes in 2026 through 2029 during recent strength in forward curve
On track to exceed $40 million in targeted land sales during the first half of 2025
Realized additional Coal Mine Methane (CMM) alternative energy credits with acquired assets from Summit Natural Resources
Next LvL Energy collaborated with the State of West Virginia regulatory agencies to modernize well retirement procedures using a method that is environmentally sound, safe, and cost-effective
Maverick Integration
Full field level integration anticipated by the end of the second quarter with technology, and administrative integration anticipated by the end of the third quarter 2025
On track to exceed the annualized synergy target of over $50 million
High-graded staffing and reduced redundancies to capture efficiencies and cost savings
Contract savings providing impacts in compression and chemicals
Delivering Reliable Results
March 2025 exit rate of 1,149 MMcfepd (192 Mboepd)(b)
Recorded average 1Q25 production of 864 MMcfepd (144 Mboepd)
Total Revenue, inclusive of settled hedges, of $295 million
Operating Cash Flow of $132 million, and Net loss of $337 million, inclusive of non-cash unsettled derivative adjustments
Achieved 1Q25 Adjusted EBITDA(c) of $138 million and Free Cash Flow(d) of $62 million
Realized 47% 1Q25 Adjusted EBITDA Margin(c)
1Q25 Total Revenue, Inclusive of Settled Hedges per Unit(e) of $3.78/Mcfe ($22.68/Boe)
1Q25 Adjusted Operating Cost per Unit(f) of $2.00/Mcfe ($12.01/Boe)
Published the 5th annual Sustainability Report, “Winning Through Collaboration”
Rusty Hutson, Jr., CEO of Diversified, commented:
“Diversified is off to a great start in 2025, demonstrating the resilience of our business model in an otherwise volatile business environment while advancing our long-term strategy with the transformational acquisition of Maverick Natural Resources. Despite the broader macroeconomic and geopolitical challenges, we delivered solid operational results and continued growth in free cash flow.
We remain committed to effectively allocating capital. Thus far this year, Diversified has returned over $59 million to our shareholders through dividends and share repurchases, while we continue to deleverage naturally from principal paydowns of our debt. We believe our shares remain a compelling investment at current levels, and we will continue to take advantage of the current cycle and market dislocation to opportunistically repurchase shares.
At the same time, we have strategically invested in growing our business with our Maverick acquisition. We are highly focused on integration across all operations and functions of the organization, using the disciplined and methodical playbook we have historically executed to drive synergies and cost-saving initiatives that should provide margin expansion over time. We fully expect to exceed our annualized synergy target of $50 million.
Despite the current uncertain environment, the Diversified team, with our ONE DEC culture, continues to perform at a high level. Diversified has a proven track record of managing through challenging markets. I am confident that with our highly strategic initiatives, we will capitalize on opportunities and emerge from the current market as an even stronger company, ensuring continued growth and success.”
Operations and Finance Update
Production
The Company recorded exit rate production in March 2025 of 1,149 MMcfepd (192 Mboepd)(b) and delivered 1Q25 average net daily production of 864 MMcfepd (144 Mboepd). Net daily production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.
The production for the quarter reflects the contribution of only two weeks of Maverick Natural Resources, which closed March 14th, 2025.
Margin and Total Cash Expenses per Unit
Diversified delivered 1Q25 per unit revenues of $3.78/Mcfe ($22.68/Boe) and Adjusted EBITDA Margin(a) of 47% (55% unhedged). Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids-related production of Maverick Natural Resources. 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 remained relatively consistent with prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture.
| 1Q25 | 1Q24 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| $/Mcfe | $/Boe | $/Mcfe | $/Boe | % | ||||||
| Average Realized Price (1) | $ | 3.78 | $ | 22.68 | $ | 3.25 | $ | 19.50 | 16 | % |
| 1Q25 | 1Q24 | |||||||||
| Adjusted Operating Cost per Unit (f) | $/Mcfe | $/Boe | $/Mcfe | $/Boe | % | |||||
| Lease Operating Expense (2) | $ | 0.92 | $ | 5.49 | $ | 0.65 | $ | 3.91 | 40 | % |
| Midstream Expense | $ | 0.23 | $ | 1.40 | $ | 0.27 | $ | 1.61 | (13 | )% |
| Gathering and Transportation | $ | 0.34 | $ | 2.06 | $ | 0.31 | $ | 1.85 | 11 | % |
| Production Taxes | $ | 0.21 | $ | 1.27 | $ | 0.12 | $ | 0.74 | 72 | % |
| Total Operating Expense (2) | $ | 1.70 | $ | 10.22 | $ | 1.35 | $ | 8.11 | 26 | % |
| Employees, Administrative Costs and Professional Fees (g) | $ | 0.30 | $ | 1.79 | $ | 0.33 | $ | 1.98 | (10 | )% |
| Adjusted Operating Cost per Unit (f)(2) | $ | 2.00 | $ | 12.01 | $ | 1.68 | $ | 10.09 | 19 | % |
| Adjusted EBITDA Margin (a) | 47 | % | 49 | % |
- 1Q25 excludes $0.04/Mcfe ($0.24/Boe) and 1Q24 excludes $0.05/Mcfe ($0.36/Boe) of other revenues generated by Next LVL Energy.
- 1Q25 excludes $0.03/Mcfe ($0.22/Boe) and 1Q24 excludes $0.07/Mcfe ($0.39/Boe) of expenses attributable to Next LVL Energy.
Values may not sum due to rounding.
Opportunistic Layering of Additional Hedges at Premium Contract Prices
Diversified has strategically taken advantage of the recent strength of the natural gas price curve to add to the Company’s 2026-2029 hedge portfolio and layering additional NYMEX volumes at an average floor price of ~$3.68/MMBtu, which is reflected in the financial derivatives positions as of April 30, 2025.
Environmental Update
Asset Retirement Progress and Next LVL Energy Update
Next LvL Energy partnered with the State of West Virginia regulatory agencies to implement advanced testing protocols and improved technology to help modernize and upgrade well retirement procedures. Through the combined efforts of real-world situation testing and oversight, the State of West Virginia has enacted new asset retirement regulations, with the resulting framework achieving an environmentally sound, safe, and cost-effective methodology.
Through the end of the first quarter, the Company has retired a combined 76 wells consisting of operated assets, state well retirements, and contracted retirement activity for third-party operators. Diversified is well-positioned to meet or exceed its retirement goal of 200 wells per year, with 57 operated wells retired as of March 31, 2025. The Company continues to drive stakeholder value via the realization of contractual partnerships to retire assets that eliminate orphaned or abandoned wells in our region and provide revenue to offset the cash costs associated with the retirement of Diversified’s wells.
Combined Company 2025 Outlook
The Company is reiterating its previously announced Full Year 2025 guidance. Following the recently completed acquisition of Maverick, Diversified expects to realize significant operational synergies associated with a larger, consolidated position in Oklahoma and the ability to improve the overall cost structure of the Maverick assets while continuing to prioritize returns and Free Cash Flow generation.
The following outlook incorporates a nine-month contribution from the recently acquired Maverick assets.
2025 Guidance
| Total Production (Mmcfe/d) | 1,050 to 1,100 |
| % Liquids | ~25% |
| % Natural Gas | ~75% |
| Total Capital Expenditures (millions) | $165 to $185 |
| Adj. EBITDA (1) (millions) | $825 to $875 |
| Adj. Free Cash Flow (1) (millions) | ~$420 |
| Leverage Target | 2.0x to 2.5x |
| Combined Company Synergies (millions) | >$50 |
- Includes the value of anticipated cash proceeds for 2025 land sales.
Conference Call Details
The Company will host a conference call today, Monday, May 12, 2025, at 1:00 PM GMT (8:00 AM EDT) to discuss the 1Q25 Trading Statement and will make an audio replay of the event available shortly thereafter.
| US (toll-free) | +1 877 836 0271 |
| UK (toll-free) | +44 (0)800 756 3429 |
| Web Audio | https://www.div.energy/news-events/ir-calendarevents |
| Replay Information | https://ir.div.energy/financial-info |
| Footnotes: | |
| (a) | Includes the total value of dividends paid and declared, and share repurchases (including Employee Benefit Trust) year-to-date, through May 12, 2025. |
| (b) | Exit rate includes full month of March 2025 production from Maverick. |
| (c) | Adjusted EBITDA represents earnings before interest, taxes, depletion, and amortization, and includes adjustments for items that are not comparable period-over-period; Adjusted EBITDA Margin represents Adjusted EBITDA as a percent of Total Revenue, Inclusive of Settled Hedges; For purposes of comparability, Adjusted EBITDA Margin excludes Other Revenue of $3 million in 1Q25 and $3 million in 1Q24, and Lease Operating Expense of $3 million in 1Q25 and $4 million in 1Q24 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy; For more information, please refer to the Non-IFRS reconciliations as set out below. |
| (d) | Free Cash Flow represents net cash provided by operating activities less expenditures on natural gas and oil properties and equipment and cash paid for interest; For more information, please refer to the Non-IFRS reconciliations as set out below. |
| (e) | Includes the impact of derivatives settled in cash; For purposes of comparability, excludes certain amounts related to Diversified’s wholly owned plugging subsidiary, Next LVL Energy. |
| (f) | Adjusted Operating Cost represent total lease operating costs plus recurring administrative costs. Total lease operating costs include base lease operating expense, owned gathering and compression (midstream) expense, third-party gathering and transportation expense, and production taxes. Recurring administrative expenses (Adjusted G&A) is a Non-IFRS financial measure defined as total administrative expenses excluding non-recurring acquisition & integration costs and non-cash equity compensation; For purposes of comparability, excludes certain amounts related to Diversified’s wholly owned plugging subsidiary, Next LVL Energy. |
| (g) | As used herein, employees, administrative costs and professional services represent total administrative expenses excluding cost 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. |
Use of Non-IFRS Measures
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion, depreciation and amortization. Adjusted EBITDA includes adjusting for items that are not comparable period-over-period, namely, finance costs, accretion of asset retirement obligation, other (income) expense, loss on joint and working interest owners receivable, gain on bargain purchases, (gain) loss on fair value adjustments of unsettled financial instruments, (gain) loss on natural gas and oil property and equipment, costs associated with acquisitions, other adjusting costs, loss on early retirement of debt, non-cash equity compensation, (gain) loss on foreign currency hedge, net (gain) loss on interest rate swaps and items of a similar nature.
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 the financial covenants under our revolving credit facility; 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.
Three Months Ended
| Amounts in 000's | March 31, 2025 | March 31, 2024 | December 31, 2024 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net income (loss) | $ | (337,391 | ) | $ | (15,145 | ) | $ | (102,033 | ) |
| Finance costs | 42,820 | 27,416 | 37,453 | ||||||
| Accretion of asset retirement obligation | 10,353 | 7,183 | 8,323 | ||||||
| Other (income) expense | (644 | ) | (5 | ) | (295 | ) | |||
| Income tax (benefit) expense | 66,790 | 5,633 | (125,052 | ) | |||||
| Depreciation, depletion and amortisation | 70,807 | 57,015 | 73,960 | ||||||
| (Gain) loss on fair value adjustments of unsettled financial instruments | 235,070 | 13,552 | 202,124 | ||||||
| (Gain) loss on natural gas and oil property and equipment (1) | 236 | 4 | 14,330 | ||||||
| (Gain) loss on sale of equity interest | — | — | 7,375 | ||||||
| Unrealized (gain) loss on investment | — | — | 6,446 | ||||||
| Costs associated with acquisitions | 2,885 | 1,519 | 4,532 | ||||||
| Other adjusting costs (2) | 5,963 | 3,693 | 7,644 | ||||||
| Loss on early retirement of debt | 39,485 | — | 2,469 | ||||||
| Non-cash equity compensation | 1,825 | 1,268 | 2,258 | ||||||
| (Gain) loss on interest rate swap | (35 | ) | (50 | ) | (41 | ) | |||
| Total Adjustments | $ | 475,555 | $ | 117,228 | $ | 241,526 | |||
| Adjusted EBITDA (c) | $ | 138,164 | $ | 102,083 | $ | 139,493 | |||
| TTM Adjusted EBITDA | $ | 508,390 | $ | 497,510 | $ | 472,309 | |||
| Pro Forma TTM Adjusted EBITDA (3) | $ | 952,216 | $ | 497,510 | $ | 548,570 |
- Excludes $2 million, $2 million and $8 million in cash proceeds received for leasehold sales during the three months ended March 31, 2025, March 31, 2024 and December 31, 2024, respectively.
- Other adjusting costs for the three months ended December 31, 2024 were primarily associated with legal fees for certain litigation.
- Pro forma TTM adjusted EBITDA includes adjustments for respective periods to pro forma results for the full twelve-month impact of intra-period acquisitions (March 31, 2025: Oaktree, Crescent Pass, East Texas II, Summit and Maverick; December 31, 2024: Oaktree, Crescent Pass Energy and East Texas II).
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 our revolving credit facility and our borrowings under or issuances of, as applicable, our subsidiaries’ securitization facilities, excluding original issuance discounts and deferred finance costs. We believe net debt is a useful indicator of our leverage and capital structure.
As used herein, net debt-to-adjusted EBITDA, or “leverage” or “leverage ratio,” is measured as net debt divided by adjusted trailing twelve-month EBITDA. We believe that this metric is a key measure of our financial liquidity and flexibility and is used in the calculation of a key metric in one of the financial covenants under our revolving credit facility.
As of
| Amounts in 000's | March 31, 2025 | March 31, 2024 | December 31, 2024 | |||
|---|---|---|---|---|---|---|
| Total non-current borrowings, net | $ | 2,544,937 | $ | 1,066,643 | $ | 1,483,779 |
| Current portion of long-term debt | 156,253 | 184,463 | 209,463 | |||
| LESS: Cash | (32,641 | ) | (3,456 | ) | (5,990 | ) |
| LESS: Restricted cash | (106,011 | ) | (32,828 | ) | (46,269 | ) |
| Net Debt | $ | 2,562,538 | $ | 1,214,822 | $ | 1,640,983 |
| Pro forma TTM adjusted EBITDA (1) | $ | 952,216 | $ | 497,510 | $ | 548,570 |
| Net debt-to-pro forma TTM adjusted EBITDA | 2.7x | 2.4x | 3.0x |
- Pro forma TTM adjusted EBITDA includes adjustments for respective periods to pro forma results for the full twelve-month impact of intra-period acquisitions (March 31, 2025: Oaktree, Crescent Pass, East Texas II, Summit and Maverick; December 31, 2024: Oaktree, Crescent Pass Energy and East Texas II).
Free Cash Flow
| Amounts in 000's Except per share amounts | Three Months Ended | Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|---|---|
| March 31, 2025 | March 31, 2024 | March 31, 2025 | ||||
| Net cash provided by operating activities | $ | 131,539 | $ | 106,258 | $ | 370,944 |
| LESS: Expenditures on natural gas and oil properties and equipment | (28,031 | ) | (9,293 | ) | (70,838 | ) |
| LESS: Cash paid for interest | (41,574 | ) | (23,759 | ) | (140,956 | ) |
| Free Cash Flow (d) | $ | 61,934 | $ | 73,206 | $ | 159,150 |
Total Revenue, Inclusive of Settled Hedges and Adjusted EBITDA Margin
As used herein, total revenue, inclusive of settled hedges, includes the impact of derivatives settled in cash. We believe that total revenue, inclusive of settled hedges, is a useful measure because it enables investors to discern our realized revenue after adjusting for the settlement of derivative contracts.
| Amounts in 000's | Three Months Ended | Three Months Ended | Year Ended | |||
|---|---|---|---|---|---|---|
| March 31, 2025 | March 31, 2024 | December 31, 2024 | ||||
| Total revenue | 346,903 | 193,624 | 794,841 | |||
| Net gain (loss) on commodity derivative instruments (1) | (52,271 | ) | 22,066 | 151,289 | ||
| Total revenue, inclusive of settled hedges (c) | 294,632 | 215,690 | 946,130 | |||
| Adjusted EBITDA (c) | 138,164 | 102,083 | 472,309 | |||
| Adjusted EBITDA Margin (c) | 47 | % | 47 | % | 50 | % |
| Adjusted EBITDA Margin, exclusive of Next LVL Energy (2) | 47 | % | 49 | % | 51 | % |
- For purposes of comparability, Adjusted EBITDA Margin excludes Other Revenue of $3 million in 1Q25 and $3 million in 1Q24, and Lease Operating Expense of $3 million in 1Q25 and $4 million in 1Q24 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy.
Cleaned text: letterheads, contacts and legal notices removed. View the original announcement ↗ · Company filings. Not investment advice.