Diversified Energy Co

Index to the Notes to the Condensed Consolidated Financial Statements (Unaudited)

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies

Description of the Company

Diversified Energy Company, a Delaware corporation (“Diversified,” “DEC,” “we,” “us,” “our,” or collectively with its wholly-

owned subsidiaries, the “Company”) is an independent energy company engaged in the development, production, transportation and

marketing of natural gas, oil and NGLs. The Company has a vertically integrated, four-basin operating model across Appalachia

(including Alabama, Pennsylvania, Virginia, West Virginia, Indiana, Kentucky, Tennessee, and Ohio), the Haynesville and the Cotton

Valley (including East Texas and West Louisiana), the Mid-Continent (including Central Texas, North Texas, and Oklahoma), and the

Permian (including West Texas and New Mexico). We also have non-core operated assets in Florida and Wyoming.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted

accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to

such rules and regulations, certain disclosures have been condensed or omitted. These unaudited condensed consolidated financial

statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended

December 31, 2025, as included in the Company’s Annual Report on Form 10-K. The accompanying unaudited condensed

consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair

statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our direct and

indirect wholly-owned subsidiaries and entities in which we have a controlling financial interest. Intercompany accounts and

transactions have been eliminated.

Reclassification

Certain reclassifications have been made to prior period financial statements and related disclosures to conform to current period

presentation. These reclassifications have no impact on previously reported total assets, total liabilities, net income or total operating

cash flows.

Segment Reporting

In accordance with ASC 280, Segment Reporting, the Company determines its operating segments based on the components of the

business regularly reviewed by the chief executive officer, who serves as the chief operating decision maker (“CODM”), for purposes

of resource allocation and performance assessment. The CODM evaluates the Company’s operations in a consolidated manner.

Accordingly, the Company hasone reportable segment.

The CODM uses consolidated income (loss) before income taxes to allocate resources and assess operating performance, and is also

regularly provided information on lease operating expense, transportation expense, production taxes, and general and administrative

expense, which represent significant segment expenses. Other segment items primarily consist of depreciation, depletion and

amortization and interest expense. These amounts are derived from, and can be found within, the Company’s Condensed Consolidated

Statements of Comprehensive Income (Loss).

Segment profit or loss reconciles directly to consolidated income (loss) before income taxes, with no reconciling items.

The Company’s reportable segment, CODM, segment performance measures, and segment assets remain materially unchanged from

those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. The Company

maintains cash balances at financial institutions, which at times may exceed federally insured limits. The Company has not

experienced any losses in such accounts and believes it faces no significant credit risk related to cash and cash equivalents.

Restricted Cash

The Company classifies cash as restricted when contractual or regulatory requirements limit its withdrawal or use for general

corporate purposes. The Company presents restricted cash as either a current or noncurrent asset based on the expected timing of the

related obligations.

Restricted cash primarily consists of:

•Amounts the Company holds as collateral for surety bonds or that state agencies require for well abandonment obligations; and

•Cash reserves the Company maintains for interest payments and fees related to its asset-backed securitization arrangements,

which an independent indenture trustee administers.

The Company’s accounting policy and the nature of its restricted cash arrangements remain consistent with those described in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2025, with no material changes during the interim period.

Equity Method Investments

Investments in affiliates over which the Company has significant influence, but not a controlling financial interest, are accounted for

using the equity method. The Company evaluates whether it has significant influence over an affiliate's operating and financial

policies by considering several factors, including its ownership interest, its representation on the affiliate's board of directors, its

participation in policy-making decisions, and its contractual arrangements with the affiliate, including management or operating

agreements. For investments in limited liability companies that maintain specific ownership accounts for each member, the Company

generally applies the equity method when its interest is more than minor.

The Company also evaluates its interests in entities to determine whether they are variable interest entities ("VIEs"). A VIE is

consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly

impact the VIE's economic performance and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could

potentially be significant to the VIE. The Company reassesses whether it is the primary beneficiary of a VIE on an ongoing basis.

When the Company holds a variable interest in a VIE but is not the primary beneficiary and has significant influence, the investment is

accounted for using the equity method.

Equity method investments are initially recorded at cost and subsequently adjusted for the Company's share of the affiliate's earnings

or losses, contributions and distributions. The Company's share of earnings or losses is recorded inincome (loss) from equity affiliate

in the Condensed Consolidated Statements of Comprehensive Income (Loss). Distributions are classified in the Condensed

Consolidated Statements of Cash Flows using the nature of distribution approach. Under this approach, distributions are classified as

operating cash inflows when they represent a return on investment and as investing cash inflows when they represent a return of

investment.

The Company reviews equity method investments for impairment whenever events or changes in circumstances indicate that an other-

than-temporary decline in value may have occurred. If the decline is other-than-temporary, the Company recognizes an impairment

loss in earnings for the excess of the investment's carrying amount over its fair value. Fair value is based on quoted market prices

when available, or otherwise on other valuation techniques, including discounted cash flows. When distributions exceed the carrying

amount of an investment, the Company recognizes the excess as a gain unless it has an implicit or explicit commitment to provide

further financial support to the affiliate. If such a commitment exists, the excess is recorded as a liability. For further details related to

equity method investments, refer to Note 3.

Recently Adopted Accounting Standards

In the current year, the Company adopted the following accounting standards:

The adoption of these standards did not significantly impact the Company’s Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards Not Yet Adopted

The following accounting standard has been issued but is not yet effective and has not been applied inthe Condensed Consolidated

Financial Statements:

The Company will adopt this standard on the effective date. Based on its preliminary assessment, the Company does not expect the

adoption of this standard to have a material impact on its consolidated financial statements.

Note 2 - Acquisitions & Divestitures

2026 Acquisitions

Camino Natural Resources, LLC (“Camino”)

On July 2, 2026, the Company completed the acquisition of the equity interests of certain affiliates of Camino that owned certain

producing properties and undeveloped acreage in Oklahoma. Simultaneously with the closing of the acquisition, the producing

properties were contributed to an indirect subsidiary of a newly formed special purpose vehicle, DP-CG Eagle JV LLC (“DP Eagle”),

and the Company entered into an agreement with funds and accounts managed by Carlyle Global Credit Investment Management,

LLC (“Carlyle”) pursuant to which the Company and Carlyle hold 40% and 60% of the equity interests in DP Eagle, respectively.

Carlyle contributed$82 million and the Company contributed$55 million in exchange for their respective equity interests in DP

Eagle. For the acquisition of undeveloped acreage, the Company retained 100% of the acreage, and this portion of the transaction was

accounted for as an asset acquisition.

The acquisition of the producing properties was funded by$895 million of ABS notes issued by DP Eagle and collateralized by the

producing properties, together with the equity contributions of the Company and Carlyle described above. The Company’s acquisition

of the undeveloped acreage, for approximately$170 million, was funded by cash on hand and borrowings under the Company’s Credit

Facility.

fair values as of July 2, 2026 were as follows (in thousands):

Sheridan Holding Company III, LLC (“Sheridan”) Asset Acquisition

On April 30, 2026, the Company acquired certain oil and natural gas wells, leasehold interests and related assets from Sheridan. Given

the concentration of assets, this transaction was considered an asset acquisition rather than a business combination. The Company paid

net consideration of$236 million, inclusive of customary purchase price adjustments. The transaction was funded through proceeds

from the Company’s Credit Facility (as defined in Note 11).

Refer to Note 11 for additional information regarding borrowings.

fair values as of April 30, 2026 were as follows (in thousands):

Other Acquisitions

During thenine months ended September 30, 2026, the Company collectively acquired certain upstream, midstream, and plugging

assets for total consideration of$26 million, inclusive of customary purchase price adjustments and transaction costs. Additionally, in

September 2026, the Company paid a deposit of$50 million in connection with the acquisition of Birch Permian Holdings, Inc. and

certain affiliated companies, including Birch Permian II, LLC (collectively, “Birch”). The acquisition is expected to close in the fourth

quarter of 2026.

2026 Divestitures

Barnett Shale (“Barnett”) and Arkansas Asset Divestitures

On June 15, 2026, the Company divested certain non-core Barnett assets for net proceeds of$118 million after customary purchase

price adjustments. The proceeds received exceeded the carrying amount of the net assets divested, resulting in a gain on natural gas

and oil properties and equipment of$20 million.

Additionally, on April 20, 2026, the Company divested certain non-core assets in Arkansas for net proceeds of$15 million after

customary purchase price adjustments.

Other Divestitures

During thenine months ended September 30, 2026, the Company divested certain non-core undeveloped acreage for consideration of

$149 million. The consideration received exceeded the carrying amount of the net assets divested, resulting in a gain on natural gas

and oil properties and equipment of$146 million.

2025 Acquisitions

Canvas Energy Inc. (“Canvas”) Asset Acquisition

On November 24, 2025, the Company acquired Canvas. The Company determined that substantially all of the fair value of the gross

assets acquired was concentrated in a single asset group; therefore, the transaction was accounted for as an asset acquisition. The

Company paid purchase consideration of$533 million, inclusive of customary purchase price adjustments. The purchase consideration

consisted of the issuance of 3,718,209 shares of common stock and$399 million in cash, inclusive oftransaction costs of$13 million.

On the date of the acquisition, the Company settled the outstanding balance of$81 million on Canvas’s credit facility.

Refer to Notes 8 and 11 for additional information regarding stockholders’ equity and borrowings.

fair values as of November 24, 2025 were as follows(in thousands):

(a)The fair value of the common stock issued was based on the closing price of the Company’s common stock on November 24, 2025

of$14.51. The fair value of our common stock is a Level 1 input as our stock price is a quoted price in an active market.

Maverick Natural Resources, LLC (“Maverick”) Business Combination

On March 14, 2025, the Company acquired Maverick. The Company determined the transaction did not have a significant

concentration of assets and that it acquired an identifiable set of inputs, processes, and outputs. As a result, the Company concluded

the transaction was a business combination. The Company paid purchase consideration of approximately$666 million, inclusive of

customary purchase price adjustments. The purchase consideration consisted of the issuance of 21,194,213 shares of common stock

and$211 million in cash. As part of the acquisition, the Company paid off on the acquisition date the$202 million balance

outstanding on Maverick’s credit facility and assumed$518 million of ABS Maverick Notes outstanding. Transaction costs associated

with the acquisition were$21 million and are included within G&A expense in the Condensed Consolidated Statements of

Comprehensive Income (Loss).

Refer to Notes 8 and 11 for additional information regarding stockholders’ equity and borrowings.

The fair value of the consideration transferred and the fair value amounts of the assets acquired and liabilities assumed as of March 14,

2025 were as follows(in thousands):

(a)The fair value of the common stock issued was based on the closing price of the Company’s common stock on March 14, 2025 of

$11.95. The fair value of our common stock is a Level 1 input as our stock price is a quoted price in an active market.

The fair value of the natural gas and oil properties was based on estimated future production volumes, adjusted for risk characteristics

associated with the classification of the acquired reserves, and related future net cash flows discounted using a weighted average cost

of capital. The Company utilized NYMEX strip pricing adjusted for inflation. Management utilized the assistance of a third-party

valuation expert to estimate the fair value of the natural gas and oil properties acquired. The Company considers the discount rate,

commodity pricing, production and operating expense to be the assumptions most sensitive to the fair value of the acquired natural gas

and oil properties and represent Level 3 inputs, other than NYMEX strip pricing which represents a Level 1 input.

Summit Natural Resources, LLC (“Summit”) Asset Acquisition

On February 27, 2025, the Company acquired certain upstream assets and related infrastructure within Virginia, West Virginia, and

Alabama of the Appalachia basin from Summit. Given the concentration of assets, this transaction was considered an asset acquisition

rather than a business combination. The Company paid consideration of$42 million, inclusive of transaction costs of$0.4 million and

customary purchase price adjustments, substantially all of which was accounted for as natural gas and oil properties. The transaction

was funded through proceeds from the ABS X Notes collateralized, in part, by the acquired assets. Refer to Note 11 for additional

information regarding borrowings.

Other Acquisitions

During thenine months ended September 30, 2025, the Company acquired certain midstream and upstream assets that are contiguous

to its existing Mid-Continent basin assets. The Company paid total consideration of$16 million, inclusive of non-cash consideration

of$4 million, customary purchase price adjustments, and transaction costs. Given the concentration of assets, these transactions were

considered asset acquisitions rather than business combinations.

2025 Divestitures

During thenine months ended September 30, 2025, the Company divested certain non-core undeveloped acreage across its operating

footprint for consideration of$144 million. The consideration received exceeded the carrying amount of the net assets divested,

resulting in a gain onnatural gas and oil properties and equipment of$84 million.

Note 3 - Equity Method Investments

In July 2026, the Company and Carlyle formed DP Eagle, in which they hold 40% and 60% of the equity interests, respectively. Refer

to Note 2 for additional information. Once Carlyle reaches a specified return threshold, the Company's share of distributions may

increase to a maximum of 46%. DP Eagle may only operate and maintain its existing producing wells, market production, hedge

commodity price exposure, service its debt and distribute residual cash to its members. It is prohibited from drilling new wells.

The Company accounts for its investment in DP Eagle using the equity method. The investment was initially recorded at cost of

$55 million, representing the Company’s cash contribution. For thethree and nine months ended September 30, 2026, the Company

recognized equity losses of$37 million from DP Eagle, included inincome (loss) from equity affiliate in the Condensed Consolidated

Statements of Comprehensive Income (Loss). During the same periods, the Company received distributions of$7 million from the

operations of DP Eagle, which represented a return on investment, and are classified within operating activities in the Condensed

Consolidated Statements of Cash Flows.

DP Eagle issued$895 million of ABS notes to finance the acquisition of the producing assets from Camino. The ABS notes are

secured by DP Eagle's producing properties and are non-recourse to the Company.

DP Eagle is a VIE because its equity investment at risk is not sufficient to finance its activities without additional subordinated

financial support, given its leveraged capital structure, which includes subordinated, investment-grade and non-investment-grade

notes. The Company holds variable interests in DP Eagle through its equity interest and its management fee. The Company is not the

primary beneficiary because it does not have the power to direct the activities that most significantly affect DP Eagle's economic

performance. DP Eagle's board of directors directs these activities by majority vote, and Carlyle holds the majority of the board's

voting power.

As of September 30, 2026, the Company’s maximum exposure to loss as a result of its involvement with DP Eagle is limited to the

carrying amount of its equity method investment of $8 million, included ininvestment in equity affiliate in the Condensed

Consolidated Balance Sheets. The Company hadno net receivables from DP Eagle as of September 30, 2026. The Company hasno

contractual obligation to provide additional capital or financial support to DP Eagle. It has not provided, and does not intend to

provide, financial or other support that it was not contractually required to provide.

The Company manages and operates DP Eagle's assets under a management services agreement and a joint operating agreement. For

these services, the Company receives a monthly administrative fee equal to 2% of DP Eagle's securitized net cash flow. For thethree

and nine months ended September 30, 2026, the Company recognized$2 million of fees from DP Eagle, recorded as a reduction of

general and administrative expense in the Condensed Consolidated Statements of Comprehensive Income (Loss). As of September 30,

2026, the Company had net payables to DP Eagle of$70 million, included inpayable to affiliates in the Condensed Consolidated

Balance Sheets.

Note 4 - Income Tax

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income,

plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes

for thenine months ended September 30, 2026 and 2025 differs from the amount that would be provided by applying the statutory

U.S. federal income tax rate of 21%to pre-tax income primarily due to the impact of federal tax credits (principally the marginal well

tax credit), state income taxes, permanent differences, and discrete items recognized in the interim period.

The effective tax rates for thenine months ended September 30, 2026 and 2025 were 55.7% and(40.3)%, respectively. For thenine

months ended September 30, 2026, we reported a taxbenefit of$145 million, a change of$103 million, compared to a taxbenefit of

$42 million for thenine months ended September 30, 2025. The effective tax rate forthe nine months ended September 30, 2026 was

primarily impacted by the recognition of the federal marginal well tax credit available to qualified producers and by management’s

estimate of the annual effective tax rate expected for the full fiscal year. The federal government provides these credits to encourage

companies to continue producing lower-volume wells during periods of low prices to maintain the underlying jobs they create and the

state and local tax revenues they generate for communities to support schools, social programs, law enforcement and other similar

public services. The differences between the statutory U.S. federal income tax rate and the effective tax rates are summarized as

follows:

(a)Federal tax credits consist primarily of the marginal well tax credit. Because the credit is a dollar amount determined

independently of pre-tax results, its impact, expressed as a percentage of pre-tax income (loss), can be positive or negative based

on the Company's forecasted annual pre-tax book income (loss) used in the estimated annual effective tax rate.

Note 5 - Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the

weighted average number of shares of common stock outstanding during the period, excluding shares held in treasury (if any) and held

by the Employee Benefit Trust established by the Company in March 2022 to benefit its employees (“EBT”). Diluted EPS reflects the

potential dilution that could occur if share-based compensation awards were exercised or converted into shares, except when their

effect would be anti-dilutive. Refer to Note 8 for additional information regarding the EBT.

The following table presents the reconciliation of the numerators and denominators used in the calculation of basic and diluted EPS for

the periods presented:

For thethree and nine months ended September 30, 2026, the diluted EPS calculation excludes 2,638,457 and 2,294,392 shares,

respectively, because their effect would have been anti-dilutive. For thethree and nine months ended September 30, 2025, the diluted

EPS calculation excludes 1,882 and 3,062 shares, respectively, because their effect would have been anti-dilutive.

Note 6 - Natural Gas & Oil Properties

The following table summarizes the Company's natural gas and oil properties for the period presented:

(a)During thenine months ended September 30, 2026, the Company’s additions primarily consisted of the Sheridan and Camino

acquisitions in April 2026 and July 2026, respectively, as well as development and recurring capital expenditures.

(b)During thenine months ended September 30, 2026, the Company’s disposals primarily consisted of the sale of the Barnett assets

in June 2026.

Refer to Note 2 for additional information regarding acquisitions and divestitures.

Note 7 - Derivatives

The Company faces volatility in market prices and basis differentials for natural gas, NGLs and oil, affecting the predictability of its

cash flows from commodity sales. Additionally, the Company’s cash flows related to interest payments on variable rate debt

obligations can be impacted by fluctuations in interest rate markets, depending on its debt structure. To manage these risks, the

Company enters into derivative contracts primarily with major financial institutions and energy trading counterparties. As of

September 30, 2026, these instruments included swaps, collars, basis swaps, and stand-alone put and call options. The Company does

not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its

derivative instruments for hedge accounting treatment. Below is a description of these instruments:

The Company may elect to enter into offsetting transactions for the above instruments for the purpose of cancelling or terminating

certain positions.

The following table summarizes the Company's calculated fair value of derivatives for the date presented:

(a)Includes future cash settlements for deferred premiums.

Netting of derivative assets and liabilities is applied at each reporting date when a legal right of offset exists under a master netting

arrangement. The Company elected to present these derivative assets and liabilities on a net basis when these conditions are satisfied.

The following table outlines the Company’s net derivatives for the date presented:

The Company presents the fair value of derivative contracts on a net basis in the Condensed Consolidated Balance Sheets. Below is

the impact of this presentation on the Company’s recognized assets and liabilities for the date presented:

The Company recorded the following gains (losses) on derivatives in the Condensed Consolidated Statements of Comprehensive

Income (Loss) for the specified periods:

All derivatives are classified as Level 2 instruments under ASC 820, as their valuation relies on observable market inputs other than

quoted prices. For further details related to fair value measurements, refer to Note 12.

Commodity Derivative Contract Modifications and Extinguishments

Occasionally, such as during the acquisition of producing assets, the completion of ABS financings, or in response to fluctuating price

environments, the Company may strategically modify, offset, terminate, or expand certain existing hedge positions. These

modifications can involve changes to the volume of production covered by contracts, the swap or strike price of specific derivative

contracts, and other similar aspects of the derivative agreements. The Company manages distinct, long-dated derivative contract

portfolios for its ABS financings and term loans. Additionally, the Company maintains a separate derivative contract portfolio for

assets secured by the Credit Facility. These derivative contract portfolios associated with the Company’s ABS financings, term loans,

and Credit Facility are presented in the Company’s Condensed Consolidated Balance Sheets.

2026 Modifications and Extinguishments

In September 2026, the Company paid$5 million to buy out certain deferred option premiums. As these modifications were made in

the normal course of business, they are presented as an operating activity in the Condensed Consolidated Statements of Cash Flows.

In June 2026, the Company paid $8 million to modify contracts associated with the ABS IV Notes in connection with their

extinguishment. As these modifications were associated with a borrowing transaction, these amounts are presented as a financing

activity in the Condensed Consolidated Statements of Cash Flows. Refer to Note 11 for additional information regarding borrowings.

2025 Modifications and Extinguishments

In February 2025, the Company adjusted portions of its commodity derivative portfolio across its legal entities for approximately

$150 million in connection with the completion of the ABS X financing arrangement. The Company made further adjustments to its

commodity derivative portfolio for approximately$21 million for the retirement of the ABS I and Term Loan I financing

arrangements(each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025).

Refer to Note 11 for additional information regarding borrowings.

Note 8 - Stockholders' Equity

The Company is authorized to issue up to 350,000,000 shares of common stock, par value$0.01 per share. As of September 30, 2026

and December 31, 2025, the Company had 70,719,000 and 76,979,625 shares of common stock issued and outstanding, respectively.

The Company is authorized to issue 30,000,000 shares of preferred stock, par value$0.01 per share. No preferred shares are issued or

outstanding.

Issuance of Common Stock

In March 2025, the Company announced the completion of its previously announced acquisition of Maverick. The transaction was

funded in part through the issuance of 21,194,213 new shares of common stock directly to the unitholders of Maverick. The total value

of the stock consideration was$253 million, excluding transaction costs of$0.4 million, based on the Company’s stock price on the

NYSE on the closing date of the Maverick transaction.

In February 2025, the Company issued 8,500,000 new shares of common stock at$14.50 per share to raise gross proceeds of$123

million, excluding transaction costs of$6 million. The Company used the net proceeds to repay a portion of the debt incurred in

connection with the Maverick acquisition.

For further details related to acquisitions, refer to Note 2.

Treasury Stock

The Company’s holdings in its own equity instruments are classified as treasury stock. The consideration paid, along with any directly

attributable incremental costs, is deducted from the Company’s stockholders’ equity until the shares are either cancelled or reissued.

No gain or loss is recognized in the Condensed Consolidated Statements of Comprehensive Income (Loss) upon the purchase, sale,

issuance, or cancellation of treasury stock. As of September 30, 2026, the Company heldno treasury stock.

Employee Benefit Trust (“EBT”)

In March 2022, the Company established the EBT to benefit its employees. The Company provides funding to the EBT to facilitate the

acquisition of shares. These shares are held in the EBT to fulfill awards and grants under the Company’s 2017 and 2025 Equity

Incentive Plans and the Employee Stock Purchase Plan (the “ESPP”). Shares held by the EBT are accounted for in the same manner as

treasury stock and are presented as a reduction of stockholders’ equity in the Condensed Consolidated Financial Statements until the

shares are used to satisfy employee awards.

No shares were acquired by the EBT during thenine months ended September 30, 2026. During thenine months ended September 30,

2025,968,778 shares were acquired by the EBT for approximately$13 million. As of September 30, 2026, the EBT held a total of

1,640,482 shares. For further details related to share-based compensation, refer to Note 9.

Stock Repurchase Program

During thenine months ended September 30, 2026, the Company repurchased 6,676,753 shares of common stock at an average price

of$14.07 per share, amounting to a total of$94 million and representing 9% of common stock issued and outstanding as of September

30, 2026. During thenine months ended September 30, 2025, the Company repurchased 3,779,460 shares of common stock at an

average price of$13.61 per share, amounting to a total of$51 million and representing 5% of common stock issued and outstanding as

of September 30, 2025.

Shares repurchased by the Company are cancelled upon repurchase and are not held as treasury stock. The Company accounts for the

cancellation of repurchased shares as a reduction of common stock for the par value of the shares cancelled, with the remaining

repurchase price recorded as a reduction of additional paid-in capital in the Condensed Consolidated Financial Statements.

Dividends

Dividends are declared at the discretion of the Board of Directors and are subject to applicable law and contractual restrictions.

Dividends are paid to holders of record as of the record date. Dividends are waived on shares held in the EBT.

The Company’s ability to pay dividends is subject to certain restrictions under its Credit Facility and other debt agreements, which

may limit dividend payments based on leverage ratios and other financial covenants. Refer to Note 11 for additional information.

Note 9 - Compensation Plans

Equity Incentive Plans

The 2017 Equity Incentive Plan (the “2017 Plan”), as amendedon April 9, 2025, authorized issuances of up to 10% of the Company’s

outstanding common stock and had 3,947,882 shares subject to outstanding awards as of November 21, 2025. On that date, the

Company adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which authorized and reserved 6,892,551 shares of common

stock, consisting of 2,944,669 newly authorized shares plus shares underlying outstanding awards under the 2017 Plan that may

become available upon forfeiture, cancellation, expiration, cash settlement, or withholding for taxes or exercise prices. Upon adoption

of the 2025 Plan, no further awards may be granted under the 2017 Plan, and only shares underlying awards outstanding as of

November 21, 2025 may be issued thereunder. As of September 30, 2026, 1,329,444 shares remained available for grant under the

2025 Plan, under which all future equity awards will be made.

RSU Awards

The following table summarizes RSU equity award activity for the respective periods presented:

During thenine months ended September 30, 2026, thetotal fair value of RSUs at the date of vesting was$4 million. As of September

30, 2026, the Company had$24 million of unrecognized share-based comp ensation expense related to RSUs that will be recognized

over a weighted average period of 1.3 years.

RSUs can vest either on a cliff basis or ratably, depending on the service conditions. The fair value of the Company’s RSUs is

calculated using the closing price of our common stock on the NYSE at the grant date. This value is then expensed uniformly over the

vesting period.

PSU Awards

The following table summarizes PSU equity award activity for the period presented:

During thenine months ended September 30, 2026, the total fair value of PSUs at the date of vesting was$2 million. As of September

30, 2026, the Company had$9 million of unrecognized share-based compensation expense related to PSUs that will be recognized

over a weighted average period of 1.3 years.

PSUs are subject to cliff vesting based on specific performance criteria over athree-year period. Depending on the achievement of

these performance targets, the number of units that will vest can vary from 0% to 250% of the initial award.

The fair value of the Company’s PSUs is determined using a Monte Carlo simulation model as of the grant date. This calculated fair

value is then expensed uniformly over the vesting period. For PSUs granted during the respective periods presented, the inputs to the

Monte Carlo model included the following:

(a)Volatility utilizes the historical volatility for the Company’s share price.

Share-Based Compensation Expense

The following table presents the share-based compensation expense for the respective periods presented:

Note 10 - Asset Retirement Obligations

The Company records a liability for the present value of the estimated future retirement costs associated with its natural gas and oil

properties. Additionally, the Company records a liability for the future retirement costs of its production facilities and pipelines when

required by contract, statute, or legal obligation. As of September 30, 2026, no state contractual agreements or statutes related to

production facilities and pipelines are expected to impose material obligations on the Company.

In estimating the present value of future retirement costs for its natural gas and oil properties, the Company considers several factors,

including the number and state jurisdictions of wells, current retirement costs by state and well type, and the Company’s retirement

plan, which is based on state requirements and the Company’s capacity to retire wells over their productive lives. The Company’s

assumptions are grounded in the current economic environment and are believed to provide a reasonable basis for estimating the future

liability. However, actual retirement costs will ultimately depend on future market prices at the time the retirement services are

performed. Additionally, the timing of retirement will vary based on when the fields cease to produce economically, which is

influenced by future natural gas and oil prices and the retirement schedule. These factors are inherently uncertain.

The Company incorporates annual inflationary cost increases into its current cost expectations and then discounts the resulting cash

flows using a credit-adjusted risk-free discount rate.

The components of the change in our asset retirement obligations are detailed below for the period presented:

(a)Additions primarily relate to the Sheridan acquisition.

(b)Disposals primarily relate to the Barnett assets divestiture.

Note 11 - Borrowings

The Company’s borrowings consist of the following amounts (in thousands) as of the date presented:

(a)Represents a variable interest rate based on utilization.

(b)Includes$65 million in notes payable issued by a third-party financial institution in September 2026, collateralized bya natural

gas processing plant and various natural gas compressors and related support equipment in the Haynesville and Cotton Valley

basin, as of September 30, 2026.

Credit Facility

The Company maintains a Credit Facility with a lending syndicate, the borrowing base for which is redetermined semi-annually or in

certain other situations as described therein. The Company’s wholly-owned subsidiary, DP RBL Co LLC, serves as the borrower

under the Credit Facility. The borrowing base is primarily determined by the value of the natural gas and oil properties that serve as

collateral for the lending arrangement, and it may fluctuate due to changes in collateral, which can result from acquisitions or the

establishment of ABS, term loans, or other lending structures.

As of September 30, 2026, the Company’s Credit Facility had a borrowing base of$900 million anda maturity of March 2029. The

Credit Facilityhas an interest rate of SOFR plus an additional spread ranging from 2.75% to 3.75% based on utilization. Interest

payments on the Credit Facility are paid on a quarterly basis. Available borrowings under the Credit Facility were $500 million as of

September 30, 2026, which excludes $14 million in letters of credit issued to certain vendors.

ABS IV Notes

In February 2022, the Company formed Diversified ABS IV LLC (“ABS IV”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue asset-backed securities with a total principal amount of$160 million at par (the “ABS IV Notes”). The ABS IV

Notes were secured by a portion of the upstream producing assets acquired through the Blackbeard acquisition. The ABS IV Notes

had an annual interest rate of 4.95% and alegal final maturity date of February 2037. Both interest and principal payments on the ABS

IV Notes were made on a monthly basis.

In June 2026, the ABS IV Notes were repaid and retired from the Company’s outstanding debt in connection with the Company’s

divestiture of its Barnett assets.

ABS VI Notes

In October 2022, the Company formed Diversified ABS VI LLC (“ABS VI”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue, jointly with Oaktree Capital Management, L.P. (“Oaktree”), asset-backed securities with a total principal amount

of$460 million. The Company’s share amounted to$236 million before fees, reflecting its 51.25% ownership interest in the collateral

assets (the “ABS VI Notes”). The ABS VI Notes were issued at a 2.63% discount and were primarily secured by the upstream assets

jointly acquired with Oaktree in the Tapstone acquisition. The Company recorded its proportionate share of the ABS VI Notes in its

Condensed Consolidated Balance Sheets. In June 2024, as part of the Oaktree acquisition, the Company assumed Oaktree’s

proportionate debt of$133 million associated with the ABS VI Notes.

The ABS VI Notes carried an annual interest rate of 7.50% and had a legal final maturity date of November 2039. Both interest and

principal payments on the ABS VI Notes were made on a monthly basis.

In May 2026, the ABS VI Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance of the

ABS XII Notes (as defined below).

ABS VIII Notes

In May 2024, the Company formed Diversified ABS VIII LLC (“ABS VIII”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS VIII Notes,” “Class A-2 ABS VIII Notes,”

and collectively the “ABS VIII Notes”). The Class A-1 ABS VIII Notes were issued with a total principal amount of$400 million,

while the Class A-2 ABS VIII Notes were issued with a total principal amount of$210 million. The proceeds from these issuances

were used to repay the outstanding principal of the ABS III & ABS V notes, effectively retiring those notes from the Company’s

outstanding debt. Consequently, ABS III and ABS V were dissolved. The ABS VIII Notes are secured by the collateral that previously

secured the ABS III and ABS V notes, which includes certain upstream producing and midstream assets in the Appalachia basin

owned by the Company, and the remaining upstream assets in the Appalachia basin that were not securitized by previous ABS

transactions.

The Class A-1 ABS VIII Notes carry an annual interest rate of 7.076%, while the Class A-2 ABS VIII Notes carry an annual interest

rate of 7.670%. These notes have an anticipated repayment date of May 2029 and a legal final maturity date of May 2044. Both

interest and principal payments on the ABS VIII Notes are made on a monthly basis.

ABS VIII is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if

the debt service coverage ratio (the “DSCR”) is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.50 to

1.00, then 50%, or (iii) if the DSCR is at least 1.50 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%,

otherwise 25%; or (c) if the loan-to-value ratio (“LTV”) exceeds 75%, then 100%, otherwise 25%.

ABS IX Notes

In June 2024, the Company formed DP Mustang Holdco LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS

IX,” formerly “ABS Facility Warehouse”), to secure a bridge loan facility (the “ABS Facility Warehouse Notes”). The initial draw on

the ABS Facility Warehouse Notes amounted to$71 million, which included$66 million in net proceeds,$3 million in restricted cash

interest reserve, and$2 million in debt issuance costs. The ABS Facility Warehouse Notes were secured by certain producing assets

that previously collateralized the Credit Facility. The ABS Facility Warehouse Notes carried an interest rate of SOFR plus an

additional 3.75% and had a legal final maturity date of May 2029. Both interest and principal payments on the ABS Facility

Warehouse Notes were made on a monthly basis.

In September 2024, the Company issued Class A and Class B asset-backed securities (the “Class A ABS IX Notes,” “Class B ABS IX

Notes,” and collectively the “ABS IX Notes”) with a total principal amount of$77 million. The Class A ABS IX Notes were issued

with a total principal amount of$71 million, while the Class B ABS IX Notes were issued with a total principal amount of$6 million.

The proceeds from these issuances were used to repay the outstanding principal of the ABS Facility Warehouse Notes, effectively

retiring them from the Company’s outstanding debt and resulting in a loss on the early retirement of debt amounting to$2 million. The

Class A ABS IX Notes carry an annual interest rate of 6.555% and have an anticipated repayment date of September 2029 and a legal

final maturity date of September 2044. The Class B ABS IX Notes carry an annual interest rate of 11.235%. Both interest and

principal payments on the ABS IX Notes are made on a monthly basis.

ABS IX is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the

DSCR at the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00, then

50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%, otherwise

25%; (c) if the LTV exceeds 75%, then 100%, otherwise 25%; or (d) if past the anticipated repayment date, then 100%, otherwise

25%. In addition, while the Class A ABS IX Notes remain outstanding, the Class B ABS IX Notes receive a minimum allocation of

14% of the excess cash flow remaining after the payments ranking senior to them.

ABS X Notes

In February 2025, the Company formed Diversified ABS Phase X LLC, a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary (“ABS X”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS X Notes,” “Class A-2

ABS X Notes,” “Class B ABS X Notes,” and collectively the “ABS X Notes”) with a total principal amount of$530 million. The

Class A-1 ABS X Notes were issued with a total principal amount of$200 million. The Class A-2 ABS X Notes were issued with a

total principal amount of$240 million. The Class B ABS X Notes were issued with a total principal amount of$90 million. The

proceeds from these issuances were used to repay the outstanding principal of the ABS I Notes, ABS II Notes, and Term Loan I,

effectively retiring those notes from the Company’s outstanding debt. The ABS X Notes are secured by certain upstream producing

assets in the Appalachia basin owned by the Company, including those that previously collateralized the ABS I Notes, ABS II Notes,

and Term Loan I. Excess proceeds from the issuance of the ABS X Notes were used to fund the Summit acquisition and for general

corporate purposes. Refer to Note 2 for additional information regarding acquisitions.

The Class A-1 ABS X Notes carry an annual interest rate of 5.945%. The Class A-2 ABS X Notes carry an annual interest rate of

6.751%. The Class B ABS X Notes carry an annual interest rate of 10.398%. These notes have an anticipated repayment date of

February 2030 and a legal final maturity date of February 2045. Both interest and principal payments on the ABS X Notes are made

on a monthly basis.

ABS X is required to allocate 32.5% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the

DSCR as of the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00,

then 50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 32.5%; (b) if the production tracking rate is below 80%, then 100%,

otherwise 32.5%; (c) (i) if the LTV exceeds 80%, then 100%, or (ii) if the LTV exceeds 75% but is not more than 80%, then 50%,

otherwise 32.5%; or (d) if the aggregate LTV exceeds 90%, then 100%. In addition, while the Class A-1 and Class A-2 ABS X notes

remain outstanding, the Class B ABS X Notes receive a minimum allocation of 15% of the excess cash flow remaining after the

payments ranking senior to them.

ABS Maverick Notes

In February 2025, the Company formed Maverick ABS Holdings LLC, a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary (“ABS Maverick”), to hold the Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS Maverick

Notes,” “Class A-2 ABS Maverick Notes,” “Class B ABS Maverick Notes,” and collectively the “ABS Maverick Notes”) assumed as

part of the Maverick acquisition. The ABS Maverick Notes had a total principal amount of$640 million upon issuance. The Class A-1

ABS Maverick Notes were issued with a total principal amount of$285 million. The Class A-2 ABS Maverick Notes were issued with

a total principal amount of$260 million. The Class B ABS Maverick Notes were issued with a total principal amount of$95 million.

Upon acquisition, the ABS Maverick Notes carried a 1.6% market premium and were secured by certain upstream producing assets in

the Western Anadarko Basin acquired in the Maverick acquisition. Refer to Note 2 for additional information regarding acquisitions.

The Class A-1 ABS Maverick Notes had an annual interest rate of 8.121%. The Class A-2 ABS Maverick Notes had an annual interest

rate of 8.946%. The Class B ABS Maverick Notes had an annual interest rate of 12.436%. These notes had a legal final maturity date

of December 2038. Both interest and principal payments on the ABS Maverick Notes were made on a monthly basis.

In May 2026, the ABS Maverick Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance

of the ABS XII Notes (as defined below).

ABS XI Notes

In November 2025, the Company formed DP Keeneland Mile LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary

(“ABS XI”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS XI Notes,” “Class A-2 ABS XI

Notes,” “Class B ABS XI Notes,” and collectively the “ABS XI Notes”) with a total principal amount of$400 million. The Class A-1

ABS XI Notes were issued with a total principal amount of$247 million. The Class A-2 ABS XI Notes were issued with a total

principal amount of$91 million. The Class B ABS XI Notes were issued with a total principal amount of$62 million. The proceeds

from this issuance were used to fund, in part, the Canvas acquisition. The ABS XI Notes are secured by certain upstream producing

assets acquired in the Canvas acquisition.

The Class A-1 ABS XI Notes carry an annual interest rate of 5.757%. The Class A-2 ABS XI Notes carry an annual interest rate of

6.547%. The Class B ABS XI Notes carry an annual interest rate of 10.129%. These notes have an anticipated repayment date of

November 2030 and a legal final maturity date of November 2045. Both interest and principal payments on the ABS XI Notes are

made on a monthly basis.

ABS XI is required to allocate 33% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the

DSCR is below 1.15 to 1.00, then 100%, (ii) if the DSCR is between 1.15 to 1.00 and 1.45 to 1.00, then 50%, or (iii) if the DSCR is at

least 1.45 to 1.00, then 33%; (b) if the production tracking rate is below 80%, then 100%, otherwise 33%; or (c) if the LTV exceeds

75%, then 100%, otherwise 33%. In addition, while the Class A-1 ABS XI and Class A-2 ABS XI notes remain outstanding, the Class

B ABS XI Notes receive a minimum allocation of 17.5% of the excess cash flow remaining after the payments ranking senior to them.

ABS XII Notes

In May 2026, the Company formed DP Red River LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS

XII”), to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS XII Notes,” “Class A-2 ABS XII Notes,” and

collectively the “ABS XII Notes”) with a total principal amount of$850 million. The Class A-1 ABS XII Notes were issued with a

total principal amount of$590 million. The Class A-2 ABS XII Notes were issued with a total principal amount of$260 million. The

proceeds from this issuance were used to repay the outstanding principal of the ABS Maverick Notes and ABS VI Notes, pay any

related premiums, fees, and expenses, and for general corporate purposes. The ABS XII Notes are secured by specific upstream

producing assets in the Western Anadarko Basin that previously collateralized the ABS Maverick Notes and ABS VI Notes.

The Class A-1 ABS XII Notes carry an annual interest rate of 6.016%. The Class A-2 ABS XII Notes carry an annual interest rate of

6.910%. These notes have an anticipated repayment date of May 2031 and a legal final maturity date of May 2046. Both interest and

principal payments on the ABS XII Notes are made on a monthly basis.

ABS XII is required to allocate 45% to 100% of any excess cash flow towards additional principal payments. Absent a performance

trigger, the required allocation is 45% for the first 24 months following closing,55% for months 25 through 36, and 60% thereafter, in

each case increased by 10 percentage points if the DSCR is below 1.75 to 1.00. The allocation increases to 100% if (a) the DSCR is

below 1.45 to 1.00, (b) the production tracking rate is below 85%, (c) the LTV is at or above 85% during the first 36 months following

closing,80% during months 37 through 48, or 75% thereafter, or (d) a rapid amortization event has occurred and is continuing.

Nordic Bonds

In April 2025, the Company issued$300 million of new senior secured notes in the Nordic bond market (the “Nordic Bonds”) at a 2%

discount, resulting in net proceeds of$294 million. The proceeds were used to repay existing indebtedness and for general corporate

purposes. The Nordic Bonds mature in April 2029 and bear interest at a fixed rate of 9.75% per annum, payable semi-annually in

arrears. The Nordic Bonds are secured by (i) all of the Company’s U.S. bank accounts, (ii) the equity interests in Diversified Gas and

Oil Company (“DGOC”) as well as DGOC’s equity interests in its direct operating subsidiaries and (iii) interests in certain

intercompany loans.

The Nordic Bonds were listed for trading on the Oslo Stock Exchange in October 2025.

In February 2026, the Company completed a$200 million tap-on offering, increasing the aggregate principal amount of the

outstanding Nordic Bonds to$500 million. The additional Nordic Bonds were issued at a 3.5% discount, resulting in net proceeds of

$193 million before transaction costs and other fees. The proceeds were used for general corporate purposes. The additional Nordic

Bonds were listed for trading on the Oslo Stock Exchange in July 2026.

Early Retirement of Debt

In February 2025, the Company used proceeds from the ABS X Notes to repay the outstanding principal of the ABS I & ABS II notes

and Term Loan I (each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025),

thereby retiring the ABS I & ABS II notes and Term Loan I from the Company’s outstanding debt and resulting in a loss on the early

retirement of debt of$27 million. Concurrently, Diversified ABS Holdings LLC, Diversified ABS Phase II Holdings LLC, and DP

Bluegrass Holdings LLC were dissolved. The ABS X Notes are secured by the collateral previously securing the ABS I & ABS II

notes, along with a portion of the collateral previously securing Term Loan I.

In March 2025, the Company used proceeds from the upsized borrowing base on the amended and restated credit agreement governing

the Credit Facility to repay the outstanding principal on Term Loan II (as previously defined in the Company’s Annual Report on

Form 10-K for the year ended December 31, 2025), thereby retiring Term Loan II from the Company’s outstanding debt and resulting

in a loss on the early retirement of debt of$0.2 million.

In May 2026, the Company used proceeds from the ABS XII Notes to repay the outstanding principal of the ABS Maverick Notes and

ABS VI Notes, thereby retiring the ABS Maverick Notes and ABS VI Notes from the Company’s outstanding debt, and resulting in a

loss on the early retirement of debt of$21 million. Concurrently, Maverick ABS Holdings LLC and Diversified ABS VI LLC were

dissolved. The ABS XII Notes are secured by the collateral previously securing the ABS Maverick Notes and ABS VI Notes.

In June 2026, the Company used proceeds from the Barnett assets divestiture to repay the outstanding principal of the ABS IV Notes,

thereby retiring the ABS IV Notes from the Company’s outstanding debt and resulting in a loss on the early retirement of debt of

$2 million. Concurrently, Diversified ABS IV LLC was dissolved.

Debt Covenants

Credit Facility

As of September 30, 2026, the Credit Facility contains certain customary representations and warranties and affirmative and negative

covenants, including covenants relating to: maintenance of books and records; financial reporting and notification; compliance with

laws; maintenance of properties and insurance; maintenance of hedged volumes; and limitations on incurrence of indebtedness, liens,

fundamental changes, international operations, asset sales, making certain debt payments and amendments, restrictive agreements,

investments, restricted payments and hedging. The restricted payment provision governs the Company’s ability to make discretionary

payments such as dividends, share repurchases, or other discretionary payments. DP RBL Co LLC may make such discretionary

payments only if, after giving pro forma effect to the payment and provided that no default, event of default or borrowing base

deficiency exists or would result, either (i) the ratio of total net debt to EBITDAX is less than 1.50 to 1.00 and liquidity (unrestricted

cash, subject to a cap, plus unused commitments under the Credit Facility) is greater than 20% of the borrowing base, or (ii) the ratio

of total net debt to EBITDAX does not exceed 2.00 to 1.00, available free cash flow is greater than zero, and liquidity is at least 20%

of the borrowing base. When the ratio of total net debt to EBITDAX exceeds 2.00 to 1.00, these discretionary payments are not

permitted, although certain limited restricted payments, including distributions to fund corporate expenses, remain permitted.

Additional covenants require DP RBL Co LLC to maintain a ratio of total net debt to EBITDAX of not more than 3.25 to 1.00 and a

ratio of current assets (with certain adjustments) to current liabilities of not less than 1.00 to 1.00 as of the last day of each fiscal

quarter.

As of September 30, 2026, the Company wasin compliance with all covenants for its Credit Facility.

ABS VIII, IX, X, XI, and XII Notes (collectively, the “ABS Notes”) and the Nordic Bonds

The ABS Notes and Nordic Bonds are governed by a series of covenants and restrictions typical for such transactions, including (i) in

the case of the ABS Notes, the requirement for the issuer to maintain specified reserve accounts to ensure the payment of interest on

the ABS Notes, (ii) provisions for optional and mandatory prepayments, specified make-whole payments under certain conditions, (iii)

covenants related to recordkeeping, access to information and similar matters, and (iv) compliance with all applicable laws and

regulations.

The ABS Notes have an anticipated repayment date, which occurs between May 2029 and May 2031, that precedes their legal final

maturity date. The Company currently expects to repay or refinance each such series on or prior to its anticipated repayment date.

If a series of ABS Notes is not repaid or refinanced by its anticipated repayment date, an accelerated amortization event occurs under

the applicable indenture. In that event, substantially all cash flow generated by the assets securing that series, after payment of senior

fees, hedge amounts, interest and scheduled principal, is applied to repay principal of that series and is not available for distribution to

the Company. In addition, the interest rate on the ABS VIII, IX, and X Notes increases by 2% per annum, and an additional amount

accrues on the ABS XII Notes at 2% per annum on their outstanding principal balance, which is not interest and is payable only from

cash flow remaining after payment of principal. The ABS XI Notes do not provide for an increased interest rate or additional amount

after their anticipated repayment date. The failure to repay a series of ABS Notes on its anticipated repayment date is not an event of

default under the applicable indenture and does not accelerate, or constitute a default under, any other series of ABS Notes, the Credit

Facility or the Nordic Bonds.

The ABS Notes are also subject to customary accelerated amortization events as outlined in the indentures governing such notes.

These events may include failure to maintain specified debt service coverage or loan to value ratios, failure to meet certain production

metrics, certain defaults by the manager under the management services agreement, certain payment defaults on other indebtedness of

the Company and its affiliates, and non-compliance with hedging requirements, as applicable.

The ABS Notes and Nordic Bonds are subject to customary events of default, which may include, as applicable, non-payment of

required interest, principal, or other amounts due, failure to comply with covenants within specified time frames, certain bankruptcy

events, breaches of specified representations and warranties, failure of security interests to be effective, and failure of the indebtedness

to be redeemed upon a change in control event.

Additionally, the Nordic Bonds contain the following financial covenants: (i) the leverage ratio shall not exceed 3.5 x, (ii) the asset

coverage ratio shall not be less than 1.20 to 1.00, (iii) book equity shall not be less than$500 million, and (iv) liquidity shall not be

less than 25% of the outstanding bonds.

As of September 30, 2026, the Company wasin compliance with all covenants related to the ABS Notes and Nordic Bonds.

Future Maturities

The table below represents the Company’s future maturities of its total borrowings as of September 30, 2026, excluding deferred

financing costs, premiums, and discounts, and does not reflect the effect of the anticipated repayment dates of the ABS Notes, which

occur between May 2029 and May 2031:

The following table details the Company’s interest expense for each of the periods presented:

Fair Value

The table below represents the fair value of the Company’s debt structures for the date presented:

(a)Carrying value approximates fair value.

(b)Fair values are measured using a market approach, based upon market rates, which are Level 2 inputs.

Note 12 - Fair Value

The fair value of an asset or liability is defined as the price that would be received to sell an asset or paid to transfer a liability in the

principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the

measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use

of unobservable inputs. To determine fair value, the Company applies a hierarchy that consists of three input levels. The first and

second levels are regarded as observable, while the third is categorized as unobservable. These input levels may be utilized in the

measurement of fair value as outlined below:

(1) Observable prices in active markets for similar assets or liabilities;

(2) Prices for identical assets or liabilities in markets that are not active;

(3) Directly observable market inputs for substantially the full term of the asset or liability; and

(4) Market inputs that are not directly observable but are derived from or corroborated by observable market data.

There were no transfers between fair value levels for thethree and nine months ended September 30, 2026.

Recurring Fair Value Measurements

Derivatives

The Company measures the fair value of its derivatives in accordance with ASC 820, Fair Value Measurement, utilizing valuation

models that incorporate observable market inputs whenever available. These inputs typically include contractual terms, current market

prices, forward price curves for natural gas, NGLs, and oil, relevant interest rate yield curves (such as U.S. Treasury and SOFR), and

volatility factors.

Derivatives are classified within the fair value hierarchy based on the observability of the inputs used in the valuation. The Company’s

fixed price swaps are classified as Level 2 and are valued using third-party discounted cash flow models, which rely on NYMEX

futures for natural gas and oil derivatives and OPIS forward curves for NGL derivatives. Interest rate derivatives, also classified as

Level 2, are valued using discounted cash flow models that incorporate contracted notional amounts, market-quoted SOFR yield

curves, and credit-adjusted risk-free rates.

Options, including call options, put options, and collars, are classified as Level 2 and valued using the Black-Scholes option pricing

model. This model incorporates contract terms such as maturity, market parameters including NYMEX and OPIS futures, interest

rates, volatility, and counterparty credit risk. Volatility and other significant inputs are obtained from independent third-party pricing

sources and are subject to monthly verification.

Basis swaps are classified as Level 2 and are valued using third-party models based on forward commodity price curves.

Changes in key inputs, such as volatility, may result in changes to the fair value measurement of the Company’s derivatives.

The following table presents assets and liabilities measured at fair value on a recurring basisfor the date presented:

Nonrecurring Fair Value Measurements

Impairment of Proved Natural Gas & Oil Properties

When impairment occurs, the Company estimates the fair value of the impaired proved natural gas and oil properties through a

discounted cash flow method, which incorporates Level 3 inputs.

Business Combinations

The Company assesses the value of acquired proved properties using an income-based approach as of the acquisition date. This

method is classified as a Level 3 fair value estimate due to its reliance on key assumptions, such as anticipated production volumes,

future commodity pricing, operating costs, weighted average cost of capital (the discount rate) and risk adjustments tailored to the

reserve classification.

Financial Instruments Not Measured at Fair Value

The carrying values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued liabilities, and

other current liabilities approximate fair value due to their highly liquid or short-term nature. The Company’s Credit Facility (see Note

11. has a recorded value that approximates fair market value, as it bears interest at a floating rate that approximates a current market

rate.

Note 13 - Commitments & Contingencies

Delivery Commitments

We have contractually agreed to deliver firm quantities of natural gas to various customers, which we expect to fulfill with production

from existing reserves. To ensure we meet these commitments, we regularly monitor our proved developed reserves.

The following table summarizes our total undiscounted commitments, compiled using best estimates based on our sales strategy, as of

September 30, 2026.

Litigation and Regulatory Proceedings

The Company is involved in various pending legal issues that have arisen in the ordinary course of business. The Company accrues for

litigation, claims, and proceedings when a liability is both probable and the amount can be reasonably estimated. As of September 30,

2026, the Company didnot have any material amounts accrued related to litigation or regulatory matters.

For any matters not accrued for, it is not possible to estimate the amount of any additional loss or range of loss that is reasonably

possible. However, based on the nature of the claims and available defenses, management believes that current litigation, claims, and

proceedings are not, individually or in the aggregate, after considering insurance coverage and indemnification, likely to have a

material adverse impact on the Company’s financial position, results of operations, or cash flows.

The Company has no other contingent liabilities that would have a material impact on the Company’s financial position, results of

operations, or cash flows.

Environmental Matters

The Company’s operations are subject to environmental laws and regulations in all the jurisdictions where it operates, and the

Company was in material compliance as of September 30, 2026. However, the Company is unable to predict the impact of additional

environmental laws and regulations that may be adopted in the future, including whether they would adversely affect its operations.

The Company can offer no assurance regarding the significance or cost of compliance associated with any new environmental

legislation or regulation once implemented.

Note 14 - Supplemental Cash Flow Information

The following table summarizes supplemental cash flow information:

Cash paid for amounts included in the measurement of operating lease liabilities represents total lease payments made during the

period. For finance leases, cash paid for amounts included in the measurement of lease liabilities represents the principal portion of

lease payments. Interest paid on finance leases is included in cash paid for interest.

Note 15 - Subsequent Events

Dividends

In November 2026, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of

$0.29 per share. The dividend is payable on March 31, 2027 to stockholders of record as of the close of business on February 26,

Borrowings

In October 2026, the Company entered into an amendment in connection with the semi-annual redetermination of the borrowing base

under the Credit Facility. Pursuant to the amendment, the borrowing base increased from$900 million to$1 billion, and the Company

renegotiated certain of its covenants. Additionally, the maturity date was changed from March 14, 2029 to the earlier of October 27,

2030 and the date 91 days before the stated maturity of the Nordic Bonds, which is currently January 8, 2029. In connection with the

redetermination, the Company used borrowings under the Credit Facility to fully repay the outstanding balance of the ABS IX Notes,

which totaled approximately$64 million, including accrued interest and premiums. Following the repayment, the assets that

collateralized the ABS IX Notes were added as collateral under the Credit Facility.