Diversified Energy Company (DEC) 15th Annual Midwest IDEAS Investor Conference summary

Business strategy and operations

• Focuses on acquiring mature, producing or previously developed natural gas assets, improving production and emissions profiles, and managing them efficiently through scale, technology, and vertical integration.

• Operates in two main regions: Appalachia (West Virginia, Ohio, Pennsylvania) and Central (East Texas, Louisiana, Oklahoma), with a balanced production profile after recent acquisitions.

• Maintains a $650 million market cap and is fully dual-listed on the NYSE and LSE, enhancing liquidity and index inclusion.

• Reduces traditional E&P risks through hedging (80-85% near-term), non-reliance on high-yield debt, and a stewardship model for environmental management.

• Achieved over 50% emissions reduction since 2022, reaching 2030 targets early, and maintains 99.5% leak-free assets.

Financial performance and capital allocation

• Maintains a low corporate production decline rate (10%), with even lower rates in Appalachia (3-4%).

• Capital expenditures are less than 10% of EBITDA, supporting high cash flow and margins above 50% for seven years.

• Returns capital via dividends (8.5% yield), share buybacks (up to 10% annually), and debt reduction through naturally de-levering ABS structures.

• Grows primarily through disciplined acquisitions at attractive valuations (PV15-PV20), with recent deals at 3x EBITDA.

• Trades at a lower multiple (4x) compared to sector average (6x), partly due to UK market dynamics and fossil fuel sentiment.

Technology, ESG, and asset management

• Employs real-time monitoring and analytics for production and emissions, enabling efficient, data-driven asset management.

• Implements "Smarter Asset Management" to optimize mature assets, earning the UN Oil and Gas Methane Partnership gold standard for emissions.

• ESG report has won European awards for two years, and the company holds an MSCI AA rating.

• Manages asset retirement in-house via Next LVL, reducing costs and liabilities, and generating third-party revenue by retiring orphan wells.

• Partners with state agencies (e.g., Ohio) to administer orphan well programs, further enhancing regulatory relationships and cash flow.