Diversified Energy Co
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 5, 2026
DEC$12.70-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001922446-26-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsContractual ObligationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001922446-26-000067
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsContractual ObligationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 234 previous paragraphs and 310 current paragraphs.
66 unchanged; 102 reworded; 105 added; 63 removed; 3 previous and 37 current paragraphs rearranged.
Tables are not compared: 21 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (105)
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•In July 2026, we completed the acquisition of the equity interests of certain affiliates of Camino Natural Resources, LLC
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billion before customary purchase price adjustments. Refer to Note 14 for additional information regarding the Camino
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acquisition.
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•In June 2026, we divested certain non-core Barnett assets for net proceeds of$116 million after customary purchase price
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adjustments. The proceeds received exceeded the carrying amount of the net assets divested resulting in a gain on natural gas and
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oil properties and equipment of$19 million.
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•In May 2026, we formed DP Red River LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS XII”), to
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issue asset-backed securities with a total principal amount of$850 million (the “ABS XII Notes”).
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•In April 2026, weacquired certain oil and natural gas wells, leasehold interests and related assets from Sheridan Holding
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Company III, LLC (“Sheridan”). Wepaid net consideration of$236 million, inclusive of customary purchase price adjustments.
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the Sheridan acquisition.
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•For thesix months ended June 30, 2026, we repurchased 5,978,251 shares, representing approximately 8% of the shares
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outstanding as of June 30, 2026.
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production of natural gas. During the second quarter, Henry Hub natural gas prices remained volatile but averaged approximately
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$2.90 per MMBtu, compared with an average of approximately$5.04 per MMBtu in the first quarter, reflecting lower prices as winter-
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driven demand eased, partially offset by strong LNG export demand and the onset of summer cooling demand.
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particular, uncertainty surrounding transit through the Strait of Hormuz contributed to market instability during the quarter.
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Domestically, policy shifts continued to support U.S. energy development and LNG export growth, although tariffs on certain
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imported steel, aluminum and derivative products introduced additional uncertainty around the cost of some equipment and materials.
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We also continued to monitor inflationary pressures, labor availability and supply chain conditions affecting the broader industry.
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(a)The basis for converting oil and NGL volumes (MBbls) to natural gas equivalent volumes (MMcfe) is determined by using the
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ratio of one Bbl of oil or NGLs to six Mcf of natural gas.
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primarily related to the Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second quarter of 2026, respectively, as
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Commodity prices fluctuate due to a range of factors outside of our control or ability to predict. These include, but are not limited to,
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increased natural gas, NGLs and oil production levels that exceed market demand, adverse or unseasonable weather conditions,
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geopolitical developments, macroeconomic events, and intensifying competition from other energy sources. Collectively, these
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entities, and geographic variances in market pricing, including basis differentials. In response to these ongoing and evolving
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conditions, we continuously monitor the commodity price environment. This disciplined approach is designed to preserve adequate
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liquidity, uphold our financial flexibility, and protect long-term shareholder value across a range of pricing scenarios.
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Commodity revenue for thethree months ended June 30, 2026 increased 28% compared to thethree months ended June 30, 2025. The
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and the 9% increase in sold volumes primarily due to the acquisitions and non-operated development as discussed above.
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The change in this metric was driven by an increase in the fair value of unsettled derivativesdue to lower forward commodity prices
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primarily for natural gas. This increase was partially offset by a decrease in the value of settled derivatives due to increased oil
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commodity prices during the period.
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increased, LOE per Mcfe remained consistent.
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while continuing to increase overall production for the second quarter of 2026, following the acquisition of Canvas in the fourth
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transportation expense per Mcfewas primarily related to additional liquids production, as transportation costs are primarily associated
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and oil wells.
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The increase in accretionwas primarily related to the Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second
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quarter of 2026, respectively.
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Removed paragraphs (63)
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•In May 2026, the Company entered into an agreement to acquire the securities of certain affiliates of Camino Natural Resources,
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billion before customary purchase price adjustments. Simultaneously, the Company entered into an agreement with Carlyle
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Global Credit Investment Management, LLC (“Carlyle”) in which Carlyle agreed to fund 60% of the purchase price for the
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producing properties in exchange for a 60% ownership interest in a newly formed special purpose vehicle (“SPV”), with the
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Company retaining a 40% ownership interest in the SPV. At closing, the producing assets are expected to be contributed to an
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indirect subsidiary of the SPV, which will be controlled by Carlyle. The acquisition of the producing assets will be funded by an
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ABS collateralized by the acquired assets, the funds contributed by Carlyle and borrowings under the Company’s Credit Facility.
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The acquisition of the undeveloped acreage will be funded by borrowings under the Company’s Credit Facility and the Company
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will retain 100% of the ownership in the undeveloped acreage. The transaction is expected to close in the third quarter of 2026,
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subject to customary closing conditions.
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•In April 2026, the Company completed the previously announced transaction to acquire certain oil and natural gas wells,
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leasehold interests and related assets from Sheridan for a gross purchase price of$248 million before customary purchase price
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adjustments.
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•In February 2026, the Company issued a$200 million tap-on offering, increasing the aggregate principal amount of the
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outstanding Nordic Bonds to$500 million. The Bonds were issued at a 3.5% discount, resulting in net proceeds of$193 million
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before transaction costs and other fees. The proceeds were used to repay existing indebtedness and for general corporate purposes.
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•For thethree months ended March 31, 2026, the Company repurchased 5,033,364 shares, representing approximately 7% of the
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shares outstanding.
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primarily on natural gas. The ongoing conflict in Iran, strong LNG export demand and colder-than-average weather drove an average
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Henry Hub price of approximately$5.04 per MMBtu for the quarter.
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Domestically, policy shifts created a more favorable operating environment, although new tariffs on imported energy equipment and
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We also monitored inflationary pressures and supply chain challenges, which affected operating costs across the industry. Despite
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Ended March 31, 2025
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Commodity prices fluctuate due to a variety of factors we can neither control nor predict, including increased production in excess of
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demand of natural gas, NGLs or oil, weather conditions, political and economic events, and competition from other energy sources.
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well as locational differences in market prices, including basis differentials. We will continue to evaluate the commodity price
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environment and adjust the pace of our activity in order to maintain appropriate liquidity and financial flexibility.
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Commodity revenue of$556 million for thethree months ended March 31, 2026 increased $227 million, or 69%, compared to$329
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million for thethree months ended March 31, 2025. Theincrease in commodity revenue was primarily related to the 22% increase in
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to acquisitions as discussed above. The average realized sales price after derivatives settlements increased due to an increase in liquids
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exposure from the Maverick and Canvas acquisitions, which resulted in a higher overall realized price.
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(a)Represents the cash settlement of derivatives that were settled during the period.
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(b)Represents the change in fair value of derivatives, net of the carrying value of derivatives that were settled during the period.
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2026 compared to aloss of$232 million in 2025, a change of$166 million, due to higher forward commodity prices. Additionally, the
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value of settled derivatives also decreased, resulting in an additional$98 million inlosses on settled derivatives in 2026 compared to
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2025 as a result of increased commodity pricing.
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prices. In the first quarter of 2026, the Company’s liquids production grew by 115% compared to the first quarter of 2025, primarily
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property taxes on assets acquired.
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increased to 29% in the first quarter of 2026 from 18% in the first quarter of 2025.
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natural gas and oil wells.
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derivatives, stockholders’ equity, asset retirement obligations, and debt. For more detailed information on these areas, refer to Notes
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derivatives, stockholders’ equity, asset retirement obligations, and borrowings. For more detailed information on these areas, refer to
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2,3,6,7,9, and 10 within the Notes to the Condensed Consolidated Financial Statements. These notes provide comprehensive
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Notes 2,3,6,7,9, and 10 within the Notes to the Condensed Consolidated Financial Statements. These notes provide comprehensive
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LLC (“Camino”) owning certain producing properties and undeveloped acreage for an estimated gross purchase price of$1.2
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(“Camino”)that owned certain producing properties and undeveloped acreage for a gross purchase price of approximately$1.2
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•In April 2026, the Company completed the semi-annual borrowing base redetermination of the revolving Credit Facility. The
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•In April 2026, we completed the semi-annual borrowing base redetermination of the Credit Facility. The borrowing base under
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borrowing base under the facility was increased from$825 million to$900 million as a result of the increase in collateral from
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the facility was increased from$825 million to$900 million as a result of the increase in collateral from certain assets acquired in
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developments, regulatory changes, and evolving supply and demand dynamics. We are a U.S. domestic energy producer focused
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developments, and evolving supply and demand dynamics. We are a U.S. domestic energy producer focused primarily on the
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Geopolitical conflicts, such as the U.S.-Iran conflict, the Russia-Ukraine war and other instability in the Middle East and Venezuela,
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Geopolitical tensions, including the conflict involving Iran, the Russia-Ukraine war, and continued instability in the Middle East and
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continued to disrupt global energy flows and underscored the strategic importance of U.S. energy production and exports.
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Venezuela, contributed to volatility in global energy markets and underscored the strategic importance of U.S. energy production. In
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materials introduced some uncertainty for the industry. Our vertically integrated model helps insulate us from direct impacts, and our
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Our vertically integrated model helps insulate us from certain direct impacts, and our hedging program continues to play an important
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hedging program plays a key role in mitigating commodity price risk and supporting cash flow stability.
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role in mitigating commodity price risk and supporting cash flow durability.
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ongoing market volatility and policy uncertainty, we remain focused on optimizing our asset base, managing costs, and enhancing
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Despite ongoing market volatility and policy uncertainty, we remain focused on optimizing our asset base, managing costs and
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operational efficiency. Our integrated model and strategic positioning continue to enable us to navigate market fluctuations and
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enhancing operational efficiency. Our integrated model and strategic positioning continue to support our ability to navigate market
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capitalize on long-term opportunities in the natural gas and oil sector.
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fluctuations and capitalize on long-term opportunities in the oil and natural gas sector.
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Results of Operations for the Three Months Ended March 31, 2026 Compared to the Three Months
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Results of Operations for the Three Months Ended June 30, 2026 Compared to the Three Months Ended
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Theincrease in production volumes for thethree months ended March 31, 2026 compared to thethree months ended March 31, 2025
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Theincrease in production volumes for thethree months ended June 30, 2026 compared to thethree months ended June 30, 2025 was
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quarter of 2025, partially offset by normal production declines.
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well as our continued non-operated development investment. These increases were partially offset by normal production declines.
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These factors impact supply and demand, which in turn determine the sales prices for our production. In addition to these factors, the
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dynamics impact supply and demand, which ultimately determine the realized sales prices for our production. In addition to these
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prices we realize for our production are affected by our derivative activities and commodity trades by non-physical trading entities, as
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market-driven factors, our realized prices are affected by our derivative activities, commodity trades executed by non-physical trading
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average realized sales prices, excluding the impact of derivatives settled in cash, and the 39% increase in sold volumes primarily due
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increase was primarily related to the 17% increase in average realized sales prices, excluding the impact of derivatives settled in cash,
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To manage our cash flows in a volatile commodity price environment, we utilize commodity derivative contracts that allow us to fix
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To manage our cash flows in a volatile commodity price environment, we utilize commodity derivative contracts that enable us to
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the per unit sales prices for our production. As of March 31, 2026, approximately 82% of our production was fixed through
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secure fixed per-unit sales prices for a portion of our production. As of June 30, 2026, approximately 86% of our production was fixed
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commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity derivatives
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through commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity derivatives
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driven by the acquisition of Maverick.
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Theincrease in LOE was primarily driven by the acquisition of Canvas in the fourth quarter of 2025. While the total expense
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expanding production volumes, the per unit cost of midstream operations declined.
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production volumes, the per unit cost of midstream operations declined.
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Canvas acquisition in the fourth quarter of 2025. Thedecrease in transportation expense per Mcfewas primarily related to additional
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Theincrease in transportation expense was driven by the Canvas acquisition in the fourth quarter of 2025. Thedecrease in
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retirement obligation (“ARO”) over time. This expense reflects the gradual recognition of the future costs associated with retiring
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retirement obligation over time. This expense reflects the gradual recognition of the future costs associated with retiring natural gas
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acquisitions in the first quarter of 2025 and the Canvas acquisition in the fourth quarter of 2025. Thedecrease in G&A per Mcfe was
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Thedecrease in G&A and G&A per Mcfe was the result of significant transaction-related costs from the closing of the Maverick
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a result of the Canvas acquisition in November 2025. This increase was partially offset by lower outstanding balances on our existing
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ABS XII Notes in May 2026. This increase was partially offset by lower outstanding balances on our existing ABS structures and
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As of March 31, 2026 and December 31, 2025, total borrowings were$2.9 billion and$3.0 billion, respectively. For thethree months
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As of June 30, 2026 and December 31, 2025, total borrowings were approximately$3 billion. For thethree months ended June 30,
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ended March 31, 2026, the weighted average interest rate on borrowings was 7.76% compared to 7.93% for thethree months ended
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2026, the weighted average interest rate on borrowings was 7.47% compared to 8.04% for thethree months ended June 30, 2025. As
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March 31, 2025. As of March 31, 2026,72% of our borrowings resided in non-recourse, fixed-rate, hedge-protected, amortizing
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of June 30, 2026,76% of our borrowings resided in non-recourse, fixed-rate, hedge-protected, amortizing structures compared to 71%
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was primarily related to the Maverick and Summit acquisitions in the first quarter of 2025 and the Canvas acquisition in the fourth
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primarily related to the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of 2025, and the
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The change in this metric was driven by a decrease in the value of unsettled derivatives, which resulted in aloss of$398 million in
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The change in this metric was primarily driven by a decrease in the value of settled derivatives due to increased natural gas and oil
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The increase in LOE was driven by the acquisitions of Summit and Maverick in thefirst quarter of 2025 and the Canvas acquisition in
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Theincrease in LOE was primarily driven by the acquisitions of Maverick in the first quarter of 2025, Canvas in the fourth quarter of
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the fourth quarter of 2025. Specifically, theincrease in LOE per Mcfewas primarily related to a greater exposure to liquids
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2025, and Sheridan in the second quarter of 2026. Specifically, theincrease in LOE per Mcfewas primarily related to a greater
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production. Areas with higher liquids output tend to incur elevated operating costs, although they also benefit from higher realized
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exposure to liquids production. Areas with higher liquids output tend to incur elevated operating costs, although they also benefit from
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a result of an increase in revenue due to higher commodity prices and the additional value of added oil revenue, as well as additional
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a result of an increase in revenue due to higher commodity prices and the additional value of added liquids revenue due to the
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while increasing overall production for the first quarter of 2026, following the acquisitions of Summit and Maverick in the first quarter
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while increasing overall production for the first six months of 2026, following the acquisitions of Maverick in the first quarter of 2025,
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of 2025 and the Canvas acquisition in the fourth quarter of 2025. By keeping midstream operations relatively unchanged and
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Canvas in the fourth quarter of 2025, and Sheridan in the second quarter of 2026. By keeping midstream operations relatively
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The increase in transportation expense was driven by the Summit and Maverick acquisitions in the first quarter of 2025 and the
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Theincrease in transportation expense was driven by the Maverick and Canvas acquisitions in the first and fourth quarters of 2025,
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Theincrease in production taxes and production taxes per Mcfe wasprimarily related to an increase in severance taxes as a result of an
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increase in revenue due to higher commodity prices for oil and NGLs.
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quarter of 2025 and Sheridan in the second quarter of 2026. By keeping midstream operations relatively unchanged and expanding
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with the movement of natural gas volumes.
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three months ended June 30, 2026. Additionally, the disposal of various property, plant and equipment in the normal course of
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Theincrease in interest expense was primarily related to the issuance of the ABS XI Notes in November 2025 and the issuance of the
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The following table summarizes our average realized sales prices and benchmark prices for the periods presented:
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The following table reconciles the change in commodity revenue (excluding the impact of derivatives settled in cash) by reflecting the
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effect of changes in volume and in the underlying prices:
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derivatives settled in cash, and the 22% increase in sold volumes.
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To manage our cash flows in a volatile commodity price environment, we utilize commodity derivative contracts that enable us to
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secure fixed per-unit sales prices for a portion of our production. As of June 30, 2026, approximately 86% of our production was fixed
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through commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity derivatives
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The table below sets forth the impact of settlements and fair value adjustments on derivatives for the periods presented:
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Lease Operating Expense (“LOE”): LOE includes costs incurred to maintain producing properties. Such costs include direct and
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contract labor, repairs and maintenance, water hauling, compression, automobile, insurance, and materials and supplies expenses.
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Production Taxes: Production taxes include severance and property taxes. Severance taxes are generally paid on produced natural
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gas, NGLs and oil production at fixed rates established by federal, state, or local taxing authorities. Property taxes are generally
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based on the taxing jurisdictions’ valuation of our natural gas and oil properties and midstream assets.
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Midstream Operating Expense: Midstream operating expenses are costs incurred to operate our owned midstream assets inclusive of
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The decrease in midstream operating expense per Mcfe wasprimarily related to maintaining a consistent level of midstream assets
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unchanged and expanding production volumes, the per unit cost of midstream operations declined.
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Transportation Expense: Transportation expenses are costs incurred from third-party systems to gather, process and transport our
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respectively. Thedecrease in transportation expense per Mcfewas primarily related to additional liquids production, as transportation
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Accretion of Asset Retirement Obligation (“Accretion”): Accretion represents the change in the carrying amount of the asset
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retirement obligation over time. This expense reflects the gradual recognition of the future costs associated with retiring natural gas
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General & Administrative Expense (“G&A”): G&A includes overhead, including payroll and benefits for our corporate staff, costs of
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maintaining our headquarters, costs of managing our operations, franchise taxes, audit and other professional fees, legal compliance,
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equity compensation, and non-recurring costs primarily related to acquisitions.
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Depreciation, Depletion & Amortization Expense (“DD&A”): DD&A expenses are non-cash charges that allocate the cost of assets
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and natural resources over their useful lives, reflecting their wear and tear, usage, or consumption.
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Gain (Loss) on Natural Gas and Oil Properties and Equipment: Gains and (losses) on natural gas and oil properties and equipment
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represent the difference between cash proceeds and recorded basis of sales of natural gas and oil properties and equipment.
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ABS Maverick Notes as a result of the Maverick acquisition in March 2025, the issuance of the Nordic Bonds in April 2025, the
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This increase was partially offset by lower outstanding balances on our existing ABS structures and Credit Facility.
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As of June 30, 2026 and December 31, 2025, total borrowings were$3 billion, respectively. For thesix months ended June 30, 2026,
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30, 2026,76% of our borrowings resided in non-recourse, fixed-rate, hedge-protected, amortizing structures compared to 71% as of
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certain assets acquired in the Sheridan acquisition.
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(loss) before taxation and the recognition of marginal well credits.
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The change in net cash used in investing activities was primarily related to the Summit and Maverick acquisitions in the first quarter of