Diversified Energy (DEC) Q1 2026 earnings summary

Executive summary

• Closed $1.175 billion Camino Natural Resources acquisition with Carlyle and Sheridan acquisition, expanding Oklahoma and East Texas operations; Camino deal structured as an off-balance sheet SPV with 60% Carlyle and 40% company ownership, retaining 100% of undeveloped acreage upside.

• Achieved strong Q1 2026 results: 39% year-over-year production growth to 1,198 MMcfepd, 69% revenue growth to $556 million, and adjusted EBITDA of $287 million (108% YoY growth, 68% margin).

• Returned $94 million to shareholders in Q1 2026 via $72 million in share repurchases and dividends; repurchased over 5 million shares (~7% of outstanding).

• Systematic debt reduction with $92 million in principal repaid, leverage ratio improved to 2.2x, and liquidity at $529 million.

• Portfolio optimization generated over $100 million in Q1 2026, with cumulative proceeds exceeding $400 million since 2023.

Financial highlights

• Q1 2026 production averaged 1,198 MMcfepd (200 Mboepd), with a March exit rate of 1,228 MMcfepd.

• Total commodity revenue was $556 million, up from $329 million YoY; adjusted free cash flow was $160 million, up 157% YoY.

• Net loss for Q1 2026 was $161 million, including a $398 million non-cash loss on unsettled derivatives, improved from $323 million loss in Q1 2025.

• Operating cash flow totaled $169 million; capital expenditures were $58 million.

• 72% of debt is non-recourse, investment-grade ABS; weighted average interest rate on borrowings was 7.76%.

Outlook and guidance

• Reiterated full-year 2026 guidance: production of 1,170–1,210 MMcfepd (28% liquids, 72% gas), adjusted EBITDA of $925–$975 million, and adjusted free cash flow of ~$430 million.

• Total capital expenditures expected at $135–$155 million; leverage target remains 2.0x–2.5x net debt to EBITDA.

• Guidance excludes recently closed Sheridan and announced Camino acquisitions; updated outlook to be provided in Q3.

• Liquidity at quarter-end was $529 million, including $55 million cash and $475 million available under the Credit Facility.

• Future capital needs expected to be funded from operating cash flows and existing liquidity.