WTI (Sep) $63.88 u/c, Brent (Oct) $66.59 +16c, Diff -$2.71 +16c.
USNG (Sep) $2.99 -8c, UKNG (Sep) 79.0p -1.82p, TTF (Sep) €32.47 -€0.43.
Oil price
Oil is unchanged today but last week it gave up over $3 for WTI and Brent, the market is concerned that the upcoming Trump/Putin talks will end up easing sanctions and thus weaken the oil price. Right now there has been no pressure on the countries concerned which will probably continue until Friday.
The Baker Hughes rig count provided a tiny bit of good news on Friday, although rigs overall were down by one unit, oil showed resilience of sorts by increasing by just the one rig to 411.
Diversified Energy Company
Diversified Energy has announced its interim results for the six months ended June 30, 2025, reporting performance in line with expectations and highlighting key strategic and financial achievements.
Delivering Reliable Results and Strategic Growth as the U.S. PDP Champion
Second Quarter 2025 Results
(Second Quarter Results Reflect Full Quarter Impact of the Acquisition of Maverick Natural Resources)
- Production exit rate(a): 1,135 MMcfepd (189 Mboepd)
- Average production: 1,149 MMcfepd (192 Mboepd)
- Production volume mix (natural gas, NGLs, oil): 73% / 13% / 14%
- Total Revenue (including settled hedges)(d): $510 million
- Operating Cash Flow: $133 million
- Adjusted EBITDA(b): $280 million
- Free Cash Flow: Adjusted Free Cash Flow(c) of $88 million after $25 million of nonrecurring transaction costs
- Annualized Adjusted FCF Yield(c) of 31%
- Revenue per unit(d): $4.88/Mcfe ($29.28/Boe)
- Adjusted cost per unit(e):$2.21/Mcfe ($13.26/Boe)
First Half 2025 Results
- Average production: 1,007 MMcfepd (168 Mboepd)
- Production volume mix (natural gas, NGLs, oil): 77% / 13% / 10%
- Total Revenue (including settled hedges)(d): $804 million
- Operating Cash Flow: $264 million
- Adjusted EBITDA(b): $418 million
- Free Cash Flow: Adjusted Free Cash Flow(c) of $152 million after $28 million of nonrecurring transaction costs
- CAPEX: $89 million
- Non-Op drilling expenditures weighted more in Q2; full-year Capex trending toward low end of guidance
- Revenue per unit(d): $4.41/Mcfe ($26.46/Boe)
- Adjusted cost per unit(e): $2.11/Mcfe ($12.66/Boe)
Improving Financial and Operational Metrics
| 1Q25 | 2Q25 | QoQ % Change | 1H24 | 1H25 | YoY % Change | |
| Production (Mmcfe/d) | 864 | 1,149 | 33% | 746 | 1,007 | 35% |
| Production volume mix | ||||||
| Natural gas | 82% | 73% | 84% | 77% | ||
| NLGs | 12% | 13% | 13% | 13% | ||
| Oil | 6% | 14% | 3% | 10% | ||
| Total Revenue(d) (millions) | $294 | $510 | 73% | $449 | $804 | 79% |
| Adj. EBITDA(b) (millions) | $138 | $280 | 103% | $218 | $418 | 92% |
| Adj. FCF(c) (millions) | $64 | $88 | 38% | $102 | $152 | 49% |
Financial Strength and Shareholder Returns
- Liquidity: $416 million of undrawn credit facility capacity and unrestricted cash
- Leverage ratio: 2.6x Net Debt to EBITDA; ~13% improvement from YE2024
- Consolidated debt consists of ~70% in non-recourse ABS securities
- ABS principal reduction: Retired $130 million in principal during 1H25
- 2Q25 dividend: $0.29 per share declared
- Shareholder returns: Over $105 million returned YTD via dividends and repurchases(f)
- Share repurchases: ~3.3 million shares repurchased YTD (~4% of outstanding shares), totaling ~$43 million(f)
Strategic Execution and Transformational Growth
- $2 Billion Carlyle Partnership
- Strategic partnership to invest up to $2 billion in existing U.S. proved developed producing (PDP) oil and gas assets
- Capitalizes on industry consolidation trends and divestitures of mature producing assets
- Non-dilutive structure preserves capital flexibility and supports long-term growth
- Enhances Diversified’s stature as a leading consolidator of upstream PDP assets
- Maverick Integration Update
- Increasing annualized synergy target to $60M from previously stated $50M, following strong execution during our integration process
- Efficiency gains through staffing optimization, contract savings, and midstream cost reductions
- Field-level integration completed in Q2
- Technology and administrative integration are on track for 3Q25 completion
- Unlocking Value Through Portfolio Optimization
- Portfolio optimization program realized ~$70 million from non-core asset and leasehold divestitures
- Joint Development Partnership continues to produce >60% IRRs with 124 wells drilled under the JDA in the last 3 years
- The program highlights optionality in DEC’s portfolio to monetize Central Region acreage via non-op drilling or leasehold divestitures
- Oklahoma midstream transaction provides a no-fee whole-owned pipeline, compression efficiencies, emissions improvement and numerous production optimization projects
- East Texas portfolio optimization yields incremental cash flow via gathering and processing dedication fees, with potential to increase Black Bear facility throughput to current full capacity of 120 MMcf per day
- Revenue of ~$6.6 million through June 2025 from Coal Mine Methane (CMM) associated environmental attribute credits
- Remain on track to grow environmental credit cash flow by 300% from YE 2024 levels
- Next LVL Energy and Regulatory Updates
- In the first half of 2025, the Company permanently retired 213 wells, including 170 Diversified wells
- Since establishment of Next Level in 2022, Diversified has retired 1,112 wells
Rusty Hutson, Jr., CEO of Diversified, commented:
“Diversified continues to deliver consistent returns on our assets, along with the expansion of our asset portfolio, reinforcing our position as the U.S. PDP Champion. Our strong first-half performance reflects the resilience of our business model, the quality of our assets, and the dedication of our talented teams. With the successful integration of Maverick progressing on schedule, we are already realizing meaningful synergies and operational efficiencies that enhance our ability to optimize cash flow in our expanded portfolio and drive long-term value from our investments.
The strategic partnership with The Carlyle Group marks a transformational milestone for Diversified. This $2 billion commitment underscores confidence in our platform and provides significant capital flexibility to capitalize on the ongoing consolidation of mature producing assets. It also strengthens our ability to scale responsibly, in a non-dilutive manner, while preserving our disciplined approach to capital allocation.
We remain focused on unlocking value across our portfolio through asset optimization, which resulted in approximately $70 million of additional cash flow, high return projects with our targeted capital investments, and the continuation of portfolio optimization through Smarter Asset Management (SAM) programs. Our NextLVL team’s industry-leading pace of asset retirements and regulatory advancements in West Virginia highlights our commitment to collaborating across our organization and with key stakeholders to solidify our commitment to sustainable operations.
As we look ahead, the mega trends of electrification, AI power demand, and US LNG Export growth only strengthen the fundamental outlook for our business. The acceleration of natural gas generation for data center demand in Appalachia creates a line of sight to meaningful in-basin demand, pointing to tighter basis spreads near our footprint in the coming years. While our expansive central region operations are well-positioned to support US Energy dominance in the Gulf Coast, including as a strategic supplier to LNG export terminals.
Given Diversified’s continued operational excellence, fundamental market tailwinds, and strategic actions to optimize our portfolio of assets, we remain confident in our ability to continue delivering consistent and resilient free cash flow, maintaining a strong balance sheet, and returning meaningful capital to shareholders. Diversified is well-positioned to thrive as a proven portfolio manager of energy assets in today’s evolving energy landscape, and we are proud to be the Right Company at the Right Time, delivering essential energy while creating long-term value for all stakeholders.”
Make no mistake this is an excellent set of figures by 2Q or 1H as DEC ‘continues to deliver consistent returns on our assets along with the expansion of our asset portfolio reinforcing our position as the U.S. PDP champion’. So says Rusty Hutson CEO.
The interim showed production of 1,007 MMcfepd with the Maverick synergies realised giving revenue of $804m ($449m), Maverick has been transformational boosting both operational opportunities and cash flow. FY production guidance is 175-183kboepd with capex of $165-185m. EBITDA was $418m ($218m) from realisations of $23.04 ($18.3) reflecting the increase in the oil as part of the mix. Operating cash flow was $264m and FCF of $152m after $25m of non-recoverable transaction costs.
As I often state the DEC model, oft misunderstood by those who should know better, has yet again performed and there is no better way to understand it than by listening into the webcast which was full of good news in which assets bought by DEC, or in partnership with others pays back in no time and then shareholders are rewarded. The model adds ‘realising meaningful synergies and operational efficiencies that enhance cash flow optimisation, drive long term value from the expanded portfolio of investments’.
Looking ahead the company has reiterated guidance but with the Maverick acquisition providing ‘significant operational synergies associated with a larger, consolidated position in Oklahoma’ and the ability to ‘improve the overall cost structure of those assets while continuing to prioritise returns and FCF generation’. That means production of 1,050-1,100 Mmcfe/d of which liquids are 25% and natural gas of 75%, Capex of $165m to $185m should head the leverage target towards the 2.0x to 2.0x net debt to EBITDA plan.
This discipline means that Diversified’s long term distribution to shareholders policy will work again this year. Today they reported a well covered 29c dividend and have so far this year repurchased 3.3m shares (4% of outstanding shares) which cost some $43m making a total of over $105m returned via dividends and repurchases and leaves the shares yielding some 8%.
I could go on but its all in the updated presentation pack, I haven’t even mentioned the strategic partnership with The Carlyle Group yet which is a ‘transformational milestone’ for Diversified. A $2bn commitment provides ‘significant capital flexibility’ and one can only dream of what the DEC guys will do with the cash but clearly It also ‘strengthens our ability to scale responsibly, in a non-dilutive manner, while preserving our disciplined approach to capital allocation’.
There is plenty more, a strong balance sheet with $416m of strong liquidity from the long term ABS notes and I haven’t mentioned the coal mine methane or the Black Bear processing facility which was bought for a meagre $10m three years ago and has already washed its face and adds yet more profit. It will also contribute to the margin story that I have always liked as DEC will continue to maintain cash margins above 50%.
I remain convinced, as do the board that DEC is a remarkably cheap share whichever way you stack it up, now up over a year it remains in the Bucket List and I expect smart US investors to continue buying the stock. Expect more acquisitions as the team go searching for deals which we are told are around.
Operations and Finance Update
Production
The Company recorded exit rate production in June 2025 of 1,135 MMcfepd (189 Mboepd)(a) and delivered 2Q25 average net daily production of 1,149 MMcfepd (192 Mboepd). The Company’s production volume mix was approximately 73% natural gas, 13% natural gas liquids (“NGL’s”), and 14% oil, with approximately 64% of production volumes from the Central region and 36% from Appalachia for the second quarter. Net daily production for the quarter continued to benefit from Diversified’s peer-leading, shallow decline profile.
Margin and Total Cash Expenses per Unit
Diversified delivered 2Q25 per unit revenues of $4.88/Mcfe(d) ($29.28/Boe) and Adjusted EBITDA Margin(b) of 63% (65% unhedged). Notably, these per unit metrics reflect an increase in both revenues and expenses from the incorporation of greater liquids-related production of Maverick. The Company’s per unit expenses are anticipated to improve as the Company implements its playbook to achieve long-term, sustainable synergies and cost savings. For example, General and Administrative expenses compared to prior period levels, despite the higher per unit costs of Maverick, supporting our progress on cost savings and synergy capture.
| 1Q25 | 2Q25 | 1H25 | 1H24 | ||||||||||||||
| $/Mcfe | $/Boe | $/Mcfe | $/Boe | $/Mcfe | $/Boe | $/Mcfe | $/Boe | ||||||||||
| Average Realized Price | $3.57 | $21.42 | $4.05 | $24.30 | $3.84 | $23.04 | $3.05 | $18.30 | |||||||||
| Other Revenue | $0.19 | $1.14 | $0.19 | $1.14 | $0.19 | $1.14 | $0.18 | $1.08 | |||||||||
| Total Revenue + Divestitures(d) | $3.78 | $22.68 | $4.88 | $29.28 | $4.41 | $26.46 | $3.30 | $19.80 | |||||||||
| Lease Operating Expense | $0.91 | $5.49 | $1.21 | $7.26 | $1.08 | $6.48 | $0.66 | $3.96 | |||||||||
| Production taxes | $0.21 | $1.26 | $0.23 | $1.38 | $0.22 | $1.32 | $0.15 | $0.90 | |||||||||
| Midstream operating expense | $0.23 | $1.38 | $0.18 | $1.08 | $0.20 | $1.20 | $0.26 | $1.56 | |||||||||
| Transportation expense | $0.35 | $2.10 | $0.36 | $2.16 | $0.35 | $2.10 | $0.31 | $1.86 | |||||||||
| Total Operating Expense | $1.70 | $10.23 | $1.98 | $11.88 | $1.85 | $11.10 | $1.38 | $8.28 | |||||||||
| Employees, Administrative Costs and Professional Fees(g) | $0.30 | $1.80 | $0.23 | $1.38 | $0.26 | $1.56 | $0.30 | $1.80 | |||||||||
| Adjusted Operating Cost per Unit(e) | $2.00 | $12.03 | $2.21 | $13.26 | $2.11 | $12.66 | $1.68 | $10.08 | |||||||||
| Adjusted EBITDA Margin(b) | 47% | 63% | 56% | 49% | |||||||||||||
Share Repurchase Program
At the 2025 Annual General Meeting, the Company’s share repurchase authority was approved for a maximum of 8,099,015 shares representing 10% of the Company’s issued share capital (the “2025 Authorization”). The Company announced details regarding the parameters of a Share Buyback Program (the “Program”) on 20 March 2025, pursuant to which the maximum number of shares repurchased shall not exceed 4,756,842 Shares under the Program. Following the 2025 Authorization, the Company announces that the maximum number of shares repurchased under the Program shall be increased to, and shall not exceed, 8,099,015 shares. Year to date, the company has repurchased 3,273,466 shares, representing approximately 4% of the shares outstanding.
Combined Company 2025 Outlook
The Company is reiterating its previously announced Full Year 2025 guidance. Following the recently completed acquisition of Maverick, Diversified expects to realize significant operational synergies associated with a larger, consolidated position in Oklahoma and the ability to improve the overall cost structure of the Maverick assets while continuing to prioritize returns and Free Cash Flow generation.
The following outlook incorporates a nine-month contribution from the recently acquired Maverick assets.
| 2025 Guidance | |
| Total Production (Mmcfe/d) | 1,050 to 1,100 |
| % Liquids | ~25% |
| % Natural Gas | ~75% |
| Total Capital Expenditures (millions) | $165 to $185 |
| Adj. EBITDA(1) (millions) | $825 to $875 |
| Adj. Free Cash Flow(1) (millions) | ~$420 |
| Leverage Target | 2.0x to 2.5x |
| Combined Company Synergies (millions) | ~$60 |
| (1) Includes the value of anticipated cash proceeds for 2025 asset optimization. | |
Footnotes:
| (a) | Exit rate includes full month of June 2025 production. |
| (b) | Adjusted EBITDA represents earnings before interest, taxes, depletion, and amortization, and includes adjustments for items that are not comparable period-over-period; Adjusted EBITDA Margin represents Adjusted EBITDA as a percent of Total Revenue, Inclusive of Settled Hedges. |
| (c) | Adjusted Free Cash Flow represents net cash provided by operating activities less expenditures on natural gas and oil properties and equipment and cash paid for interest, and includes proceeds from divestitures; For more information, please refer to the Non-IFRS reconciliations as set out below. |
| (d) | Includes the impact of derivatives settled in cash and proceeds from divestitures; For purposes of comparability, excludes Other Revenue of $3 million in 1Q25, $3 million in 2Q25, $6 million in 1H25, and $8 million in 1H24, and Lease Operating Expense of $3 million in 1Q25, $4 million in 2Q25, $7 million in 1H25, and $9 million in 1H24 associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy. |
| (e) | Adjusted Operating Cost represent total lease operating costs plus recurring administrative costs. Total lease operating costs include base lease operating expense, owned gathering and compression (midstream) expense, third-party gathering and transportation expense, and production taxes. Recurring administrative expenses (Adjusted G&A) is a Non-IFRS financial measure defined as total administrative expenses excluding non-recurring acquisition & integration costs and non-cash equity compensation; For purposes of comparability, excludes certain amounts related to Diversified’s wholly owned plugging subsidiary, Next LVL Energy. |
| (f) | Includes the total value of dividends paid and declared, and share repurchases (including Employee Benefit Trust) year-to-date, through August 11, 2025. |
| (g) | As used herein, employees, administrative costs and professional services represent total administrative expenses excluding cost associated with acquisitions, other adjusting costs and non-cash expenses. We use employees, administrative costs and professional services because this measure excludes items that affect the comparability of results or that are not indicative of trends in the ongoing business. |
Angus Energy
Angus has announced that Alex Craig and Richard Glass have joined the Board as Non-Executive Directors. Alex will represent one of the Company’s larger shareholding group, Aleph Commodities and Richard will represent Forum Holdings.
Alex brings considerable experience in mergers and acquisitions activities. He is currently focusing on investments in critical metals. Alex was previously founding partner of Aleph Commodities where he built out Aleph’s midstream bulk liquid storage business and remains a non-executive director. He also manages diversified investment portfolios with heavy focus on commodities trading, infrastructure and real estate.
Richard holds a BSc in Electro-Mechanical Engineering and an MBA. He has extensive experience spanning engineering projects, real estate developments, mergers and acquisitions, financial structuring, and capital markets. His career includes roles with Accenture and Investec, and he has consistently delivered value to institutional, corporate, and private stakeholders through a range of advisory mandates and entrepreneurial ventures.
Krzysztof Zielicki, Chairman of Angus, commented,
“the Board welcomes both these appointments. They bring a wealth of experience in the area of acquisitions and corporate finance. The strengthened board demonstrates the commitment of our major shareholders to the development and growth of Angus”.
I don’t normally comment on NED’s but in this case, given who they represent these two appointments are key and should be a useful addition to the board.
And finally…
You know that sport is taking a break for the summer when The Hundred arrives and it’s The Shergar Cup at Ascot. The former has taken Test cricket from the summer calendar and the latter is a mish mash of jockeys some of whom wouldn’t know who Shergar was if he was pulling the local milk cart down the road…
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#Malcys #Blog #Oil #price #Diversified #Energy #Company #Angus #Energy #finally..