Diversified Energy Company PLC is pleased to announce its Final Results for the year ended 31 December 2022 and other recent highlights. Diversified has published to the Company's website its annual report and accounts for the year ended 31 December 2022 (the "Annual Report") and notice of the annual general meeting ("AGM") of shareholders (the "Notice") along with the form of proxy for the AGM.
Operating and Financial Highlights
• Record average net daily production: 135 MBoepd (811 MMcfepd)
o December exit rate of 141 Mboepd(a) (846 MMcfepd) excluding weather-related downtime
• Year end 2022 reserves of 830 MMboe and $6.1 billion; 61% value increase from year end 2021(b)
• Adjusted EBITDA of $503 million(c) generating Free Cash Flow of $219 million(d)
• Adjusted EBITDA Margin of 50%(e)
• Net loss of $620 million, inclusive of $668 million tax-effected, non-cash unsettled derivative fair value adjustments
• Total Revenue, Inclusive of Hedges up 49% to $1 billion(f), net of $896 million commodity cash hedge payments
o Total Revenue up 90% to $1.9 billion
• Dividends paid per share up 6% to $0.17; Total dividends paid up 10% to $143 million
• Recommending a final quarterly dividend of $0.04375 per share
• ~85% of 2023 production hedged at an average natural gas price of $3.83/Mcf
o Represents ~34% price premium and ~70% increase in coverage from year-end 2021
• Completed four sustainability-linked ABS transactions totaling $1.2 billion and amended the Company's Credit Facility to include sustainability-linked features, with 70% of total borrowings now sustainability linked
• Completed a total of $566 million in recent acquisitions, including Tanos Energy II assets in February 2023 and the upstream, midstream and plugging acquisitions in 2022
• Current liquidity of ~$190 million(g) and Leverage (Net Debt-to-Adjusted EBITDA) of 2.2x(h)
ESG Highlights
• Awarded OGMP 2.0's Gold Standard for emissions reporting during 2022
• 2022 Methane Emissions Intensity down 20% to 1.2MT CO2e/MMcfe (FY21: 1.5 ), reflecting the impact of Diversified's ongoing emissions detection and measurement activities, which included the following for the full year 2022:
o Completed 2+ surveys on ~95% of producing sites with a no-leak rate of over 95% on repeat surveys
o Conducted aerial surveys of ~60% of the Company's ~17,700 mile midstream system
• Responsibly and efficiently retired 200(i) wells, up 47% from Appalachian well retirements in the previous year
o Next LVL Energy has been awarded well retirement contracts on over 150 wells in 2023 for state orphan well programmes and third-party operators
• The Company anticipates issuing its 2022 Sustainability Report in April 2023
Commenting on the results, CEO Rusty Hutson, Jr. said:
"2022 was another productive year for Diversified, growing our high-quality asset base, optimizing our production, continuing our vertical integration, generating significant Free Cash Flow, and returning meaningful capital to shareholders through dividends and share repurchases. We delivered a 49% increase in total hedged revenue resulting in approximately 50% margins for the fifth consecutive year, driven by our disciplined hedging strategy. This translated into Diversified ranking in the top 20 of total shareholder returns in the FTSE 250 for the year.
As the Company enters 2023, the progress we made during the past year, both financially and operationally, puts Diversified in a strong position for the expanding opportunity set that lies ahead. Our prudent hedge position of approximately 85% of the year's current production with a floor of approximately $3.83 per Mcf, well above forecasted prices, will allow us to manage the current low-price environment. At the same time, we remain incredibly optimistic about the long-term outlook for natural gas. We are laser-focused on our strategy of consolidating mature assets at attractive multiples while enhancing our margins through vertical integration of the energy value chain from production to retirement. We have built a company that provides safe, reliable, and responsibly produced energy while delivering meaningful value to shareholders."
