Diversified Energy Delivers Record Year with Doubling of Cash Flow and EBITDA on Transformative Acquisitions

EBITDA and Free Cash Flow More Than Double Year-Over-Year On Back of $2 Billion in Deals

Diversified Energy Company (NYSE/LSE: DEC) announced its best-ever annual results, recording 2025 as a year of transformative growth. The company achieved a 103% year-over-year increase in adjusted EBITDA and a 110% rise in adjusted free cash flow, fueled by the successful integration of over $2 billion in acquisitions, most notably Maverick Natural Resources and Canvas Energy. These strategic moves have not only reshaped DEC's operational profile, but also positioned it for future resilience across commodity cycles.

Operational Performance Surges With Strong Production Growth and Margin Expansion

DEC ramped up its average daily production for the year to 1,086 MMcfe/d, a 37% jump from 2024, while the fourth quarter saw a 42% yearly increase. The portfolio's production mix is now more diversified, with natural gas making up 75%, NGLs 13%, and oil 12% of total output for the year. Revenue surged by 142% to $1.83 billion while net income rebounded sharply, swinging from a loss of $103 million in 2024 to a gain of $342 million in 2025.

Shareholder Returns and Stronger Balance Sheet Highlight Financial Discipline

DEC continued to prioritize returns to shareholders, delivering over $185 million through dividends and share repurchases, representing a yield of roughly 18%. In total, the company bought back about 11% of its outstanding shares through early 2026, with a new authorization set to allow repurchases of up to 10% more.

Leverage reduction was another highlight: DEC’s net debt-to-pro forma adjusted EBITDA ratio improved to 2.3x, compared to 3.0x last year, thanks to systematic debt retirement and robust cash flow. The majority (about 73%) of its consolidated debt remains in non-recourse ABS securities, supporting long-term capital flexibility.

Synergies From Acquisitions and Partnerships Support Multi-Basin Diversification

The integration of Maverick and Canvas acquisitions delivered notable synergies—over $60 million from Maverick and more than $20 million from Canvas. These deals moved DEC closer to $1.2 billion in pro-forma adjusted EBITDA and allowed the company to consolidate its position as a low-decline, cash-generating energy operator with balanced exposure across multiple basins and commodities.

DEC’s partnership with Carlyle, set to invest up to $2 billion in U.S. oil and gas assets, marks another strategic lever; the first fruits already materialized with the Canvas transaction and additional Permian and Oklahoma joint development programs delivering high IRRs and capital efficiency.

Guidance Shows Confidence for 2026 Despite Capital Discipline

This outlook includes upside from DEC’s asset optimization program, ongoing cost improvements, and steady capital investments. The board’s continued commitment to shareholder returns is reinforced by the latest repurchase authorization, and management points to the company’s ability to generate cash throughout commodity cycles.

Portfolio Optimization, ESG Initiatives, and Strategic Focus Drive Long-Term Value

DEC realized about $160 million from non-core asset divestitures in 2025 and generated additional cash flow from environmental credits through coal mine methane projects. Its Next LVL Energy subsidiary furthered plugging and abandonment initiatives, with more than 1,400 wells retired since 2022.

As CEO Rusty Hutson noted, “For 25 years we have been in the business of stepping up when others step away… Today, we are the single largest operator of established producing wells in the United States… and we maintain a track record of delivering innovation, operational excellence, and results every day.”

Key Takeaway: Focused Execution Underpins a Strong Platform for Continued Growth

DEC’s transformative year has meaningfully expanded its free cash flow and earnings base while improving balance sheet flexibility and rewarding shareholders. With multiple levers for growth—from synergy capture to non-core divestitures and strategic partnerships—the company is well-positioned to sustain value creation into 2026 and beyond. For readers, DEC’s results exemplify how disciplined capital allocation and operational integration in the energy sector can amplify returns and provide resilience even during periods of heavy consolidation and shifting commodity prices.

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