Diversified Energy Company (DEC) 16th Annual Midwest Ideas Conference summary

Business overview and strategy

• Operates as a dual-listed company with a $1.3B market cap and $3.6B enterprise value, producing 1.2 BCFE/day, focused on optimizing free cash flow through strategic acquisitions and balanced capital allocation.

• Growth has shifted from the Appalachian Basin to the Central Region (Oklahoma, Texas, Louisiana), now representing 65% of production; completed a $1.3B acquisition of Maverick Natural Resources, entering the Permian Basin.

• Utilizes vertical integration and scale to optimize costs, improve efficiencies, and operates Next LVL, an asset retirement company generating incremental revenue.

• Focuses on acquiring mature producing assets, leveraging operational excellence and disciplined evaluation to improve economic and environmental performance.

• Highly hedged portfolio (80-85% near-term), de-risking commodity price exposure and enabling low-cost, investment-grade ABS financing.

Financial performance and capital allocation

• Achieved over 310% adjusted EBITDA growth in five years, driven by acquisitions and production base expansion.

• Balanced capital allocation includes systematic debt reduction, dividends, and share repurchases; $43M in shares repurchased in H1, about 4% of shares outstanding.

• Over $2B returned to shareholders via dividends, buybacks, and debt repayments since IPO, exceeding current market cap.

• Free cash flow for 2023 guided at $420M, with dividends representing 20-22% of free cash flow; dividend fixed at $1.16/share.

• CapEx guidance for 2023 is $165M-$185M, with $110M allocated to upstream development, mainly through non-op partnerships.

Growth initiatives and partnerships

• Strategic partnership with The Carlyle Group provides $2B ring-fenced for acquisitions, using ABS structures to deconsolidate debt and enable larger deals.

• Carlyle partnership involves both debt and equity components, with Carlyle owning over 50% of the equity in new ABS-financed acquisitions.

• Ongoing focus on acquiring cash-generating, low-decline PDP assets, with additional revenue from land sales, coal mine methane, and midstream/marketing operations.

• Recent Maverick acquisition diversified production mix to 72% natural gas and 28% liquids, enhancing cash flow resilience.

• Incremental cash flow generated from asset sales, undeveloped acreage, and third-party services through Next LVL.