Diversified Energy Co
For the period ended Sep 30, 2026. Filed Nov 4, 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.
Sep 30, 2026 · Filed Nov 4, 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 2026-06-30; filed 2026-08-05.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsContractual ObligationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
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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 310 previous paragraphs and 341 current paragraphs.
147 unchanged; 97 reworded; 90 added; 57 removed; 9 previous and 7 current paragraphs rearranged.
Tables are not compared: 34 previous and 38 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 (90)
Current report
•On September 2, 2026, we entered into definitive agreements to acquire Birch Permian Holdings, Inc. and certain affiliated
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companies. Pursuant to the pending acquisition, we will acquire approximately 46,000 net mineral acres in the Midland Basin,
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including approximately 500 gross (480 net total) operated wells, as well as integrated midstream and water infrastructure assets.
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The aggregate purchase price for the acquisition is approximately$1.8 billion (inclusive of repayment of indebtedness), subject to
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customary adjustments, and is expected to be funded by an asset-backed securitization of approximately $1.5 billion in advance of
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closing and liquidity under the Company’s Credit Facility. The acquisition is expected to close in the fourth quarter of 2026,
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subject to the satisfaction of customary closing conditions.
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•In July 2026, the Company and funds and accounts managed by Carlyle formed DP Eagle. The Company contributed$55 million
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in cash for a 40% equity interest in DP Eagle, and Carlyle contributed$82 million in cash for a 60% equity interest. DP Eagle
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issued$895 million of ABS notes, together with the equity contributions from the Company and Carlyle, to fund an acquisition of
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producing properties in the Anadarko Basin in Oklahoma from Camino. In connection with the formation of DP Eagle, the
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Company acquired undeveloped acreage from Camino for approximately$170 million. Refer to Note 2 for additional information
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regarding the Camino acquisition.
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production of natural gas, while oil and NGLs also represent a significant portion of our production revenue. During the third quarter,
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Henry Hub natural gas prices remained volatile, reflecting changes in domestic supply and demand, weather-driven demand and
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continued growth in demand for U.S. LNG exports. Henry Hub natural gas prices averaged approximately$2.95 per MMbtu in the
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Oil prices remained elevated and volatile during the third quarter, primarily because of continued supply disruptions in the Middle
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East. WTI crude oil prices averaged approximately$85.79 per barrel in the third quarter, compared with an average of approximately
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$92.79 and$71.93 per barrel in the second and first quarters, respectively, and$64.93 per barrel in the third quarter of 2025. Oil prices
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eased early in the quarter as flows through the Strait of Hormuz partially recovered following the June interim agreement between the
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United States and Iran. WTI prices rose again after military strikes resumed in July and climbed further in September as attacks on
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energy infrastructure in the Middle East and Russia intensified. Declining global oil inventories also contributed to higher prices late
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in the quarter.
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Domestically, continued growth in U.S. LNG export capacity supported demand for natural gas, while tariffs on certain imported steel,
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increased our average realized oil prices before the effect of derivative settlements. However, our hedging program limited the impact
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of the higher prices. Our vertically integrated operating model may reduce our exposure to certain cost and supply chain pressures,
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while our hedging program continues to mitigate our exposure to commodity price volatility andsupports cash flow stability.
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optimizing our asset base, managing costs and enhancing operational efficiency. Our integrated operating model and strategic
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Refer to the Company’s “Risk Factors” previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended
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December 31, 2025, as updated by our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.
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Ended September 30, 2025
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sale in the second quarter of 2026 and normal production declines.
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above.
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derivatives settlements on commodity revenue:
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acquisition of Sheridan in the second quarter of 2026. Specifically, the increase in LOE per Mcfe was primarily related to a greater
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liquids revenue due to the acquisitions discussed above.
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Thedecrease in transportation expense was primarily driven by the sale of the Barnett assets in the second quarter of 2026, as these
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assets carried higher gathering and transportation costs. Thedecrease in transportation expense per Mcfewas also driven by additional
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quarter of 2026, respectively. This increase was partially offset by the divestiture of the Barnett assets in the second quarter of 2026.
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Theincrease in DD&A was primarily related to a higher DD&A rate anda 5% increase in production compared to the prior-year
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Removed paragraphs (57)
Previous report
•In July 2026, we completed the acquisition of the equity interests of certain affiliates of Camino Natural Resources, LLC
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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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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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•In April 2026, we completed the semi-annual borrowing base redetermination of the Credit Facility. The borrowing base under
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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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the Sheridan acquisition.
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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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driven demand eased, partially offset by strong LNG export demand and the onset of summer cooling demand.
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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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Venezuela, contributed to volatility in global energy markets and underscored the strategic importance of U.S. energy production. In
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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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Our vertically integrated model helps insulate us from certain direct impacts, and our hedging program continues to play an important
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role in mitigating commodity price risk and supporting cash flow durability.
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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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settlements on commodity revenue:
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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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commodity prices during the period.
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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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quarter of 2026, respectively.
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acquisition in the first quarter of 2025, reflecting the full impact of the administrative synergies realized from this acquisition in 2026.
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Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second quarter of 2026, respectively, as well as continued non-
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operated development.
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The decrease in this metric was primarily related to decreased acreage sale activity, partially offset by the gain on sale recognized from
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business resulted in a loss on natural gas and oil properties and equipment of$7 million for thethree months ended June 30, 2026.
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Credit Facility.
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as of June 30, 2025.
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Theincrease in production volumes for thesix months ended June 30, 2026 compared to thesix months ended June 30, 2025 was
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Sheridan acquisitions in the second quarter of 2026, as well as our continued non-operated development investment, partially offset by
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normal production declines.
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settlements on commodity revenue:
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commodity prices during the period. This decrease was partially offset by an increase in the value of unsettled derivatives during the
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Reworded paragraphs (97)
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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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Notes 2,3,4,7,8,10,11, and 15 within the Notes to the Condensed Consolidated Financial Statements. These notes provide
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disclosures and explanations that support the analysis presented in this section.
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comprehensive disclosures and explanations that support the analysis presented in this section.
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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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•For thenine months ended September 30, 2026, we repurchased 6,676,753 shares, representing approximately 9% of the shares
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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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third quarter, compared with an average of approximately$2.90 and$5.04 per MMbtu in the second and first quarters, respectively.
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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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aluminum and derivative products contributed to uncertainty regarding the cost of certain equipment and materials. Higher oil prices
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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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Despite ongoing commodity price volatility, geopolitical uncertainty and changing market conditions, we remain focused on
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fluctuations and capitalize on long-term opportunities in the oil and natural gas sector.
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positioning support our ability to manage market fluctuations and pursue long-term opportunities in the U.S. oil and natural gas sector.
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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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Results of Operations for the Three Months Ended September 30, 2026 Compared to the Three Months
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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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Theincrease in production volumes for thethree months ended September 30, 2026 compared to thethree months ended September
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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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30, 2025 was primarily related to the Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second quarter of 2026,
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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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respectively, as well as our continued non-operated development investment. These increases were partially offset by the Barnett asset
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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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liquidity, uphold our financial flexibility, and protect long-term stockholder 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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Commodity revenue for thethree months ended September 30, 2026 increased 26% compared to thethree months ended September
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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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30, 2025. Theincrease was primarily related to the 19% increase in average realized sales prices, excluding the impact of derivatives
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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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settled in cash, and the 5% increase in sold volumes primarily due to the acquisitions and non-operated development as discussed
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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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secure fixed per-unit sales prices for a portion of our production. As of September 30, 2026, approximately 80% of our production was
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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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fixed through commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity
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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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The change in this metric was primarily driven by a decrease in the value of settled and unsettled derivatives due to increased liquids
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period based on forward commodity pricing movement.
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commodity prices both during the period and based on forward commodity pricing movement.
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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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Theincrease in LOE and LOE per Mcfe was primarily driven by the acquisition of Canvas in the fourth quarter of 2025 and the
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increase in revenue due to higher commodity prices for oil and NGLs.
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increase in revenue due to higher commodity prices and production volumes for oil and NGLs and the additional value of added
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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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while continuing to increase overall production for the third quarter of 2026, following the acquisition of Canvas in the fourth quarter
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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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of 2025 and Sheridan in the second quarter of 2026. By keeping midstream operations relatively unchanged and expanding production
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production volumes, the per unit cost of midstream operations declined.
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volumes, the per unit cost of midstream operations declined.
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with the movement of natural gas volumes.
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liquids production, as transportation costs are primarily associated with the movement of natural gas volumes.
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increased, LOE per Mcfe remained consistent.
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G&A and G&A per Mcfe remained consistent as a result of recognizing administrative synergies and leveraging our existing
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the sale of the Barnett assets. For thethree months ended June 30, 2026, we recognized a gain of$24 million from acreage sales
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three months ended September 30, 2026, we recognized a gain of$21 million from acreage sales compared to$20 million for thethree
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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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months ended September 30, 2025. 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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Theincrease in interest expense was primarily related to the issuance of the ABS XI Notes in November 2025, the tap-on offering of
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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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Nordic Bonds in February 2026, and the issuance of the ABS XII Notes in May 2026. This increase was partially offset by lower
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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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outstanding balances on our previously existing ABS structures and Credit Facility.
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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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As of September 30, 2026 and December 31, 2025, total borrowings were approximately$3 billion. 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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September 30, 2026, the weighted average interest rate on borrowings was 7.27% compared to 7.88% for thethree months ended
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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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September 30, 2025. As of September 30, 2026,72% of our borrowings resided in non-recourse, fixed-rate, hedge-protected,
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Results of Operations for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June
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Results of Operations for the Nine Months Ended September 30, 2026 Compared to the Nine Months
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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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2025 was primarily related to the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of
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the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of 2025, and the Sheridan acquisition
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2025, and the Sheridan acquisition in the second quarter of 2026, as well as our continued non-operated development investment.
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The following table reconciles the change in commodity revenue (excluding the impact of hedges settled in cash) by reflecting the
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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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derivatives settled in cash, and the 22% increase in sold volumes.
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derivatives settled in cash, and a 16% increase in sold volumes.
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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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secure fixed per-unit sales prices for a portion of our production. As of September 30, 2026, approximately 80% of our production was
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infrastructure in 2026, which offset acquisition-related headcount increases.
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amortizing structures compared to 71% as of September 30, 2025.
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commodity prices both during the period and based on forward commodity pricing movement.
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production as a result of these acquisitions. Areas with higher liquids output tend to incur elevated operating costs, although they also
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Notes in the second quarter of 2026, as well as lower outstanding balances on our previously existing ABS structures and Credit
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amortizing structures compared to 71% as of September 30, 2025.
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optimization, technology, plugging requirements, fleet, emissions reduction initiatives and development activities.
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transportation expense per Mcfewas primarily related to additional liquids production, as transportation costs are primarily associated
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of 2025, and Sheridan in the second quarter of 2026.
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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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Theincrease in DD&A was primarily related toa 22% increase in production over the period. The increase in production was due to
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In May 2026, the proceeds from the ABS XII Notes were used to repay the outstanding principal of the ABS Maverick Notes and
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on the early retirement of debt of$21 million. Additionally, in June 2026, proceeds from the Barnett assets divestiture were used to
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resulting in a loss on the early retirement of debt of$2 million.
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agreement that came with the undeveloped locations acquired in the Maverick acquisition. We expect to meet our capital expenditure
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the issuance of the ABS X Notes as well as our equity offering, partially offset by hedge modification payments and deferred