Diversified Energy Company · NYSE:DEC
Diversified Energy — Q3 2024 Earnings Presentation
22 slides from Diversified Energy's earnings presentation, Nov 12, 2024
Slide 1: Energy Optimized: Third Quarter 2024 Results
Energy Optimized Third Quarter 2024 Results November 12, 2024
Slide 2: Disclaimer
The information contained in this document (the "Presentation") has been prepared by Diversified Energy Forward-looking statements speak only as of their date and neither the Company nor the Group nor any of its respective Company PLC (“Diversified” or the "Company”). This Presentation is for genera
Slide 3: Building a Strategic, Resilient Energy Producer
BUILDING A STRATEGIC, RESILIENT ENERGY PRODUCER Scaling a Differentiated Business Model: Right Company at the Accretive & strategic acquisitions enhance margins and unlock potential for cost Right Time….. synergies providing additional cash flows Delivering Shareholder Benefits: Leveraging reliable
Slide 4: 2024 Action Plan – Executing on Our Strategy
2024 ACTION PLAN – EXECUTING ON OUR STRATEGY $154 million ~$85 million >$20 million $585 million of debt principal payments in Dividend Distributions value of shares repurchased of announced acquisitions ~3% of Shares Outstanding Systematic Debt Fixed per-share Strategic Accretive Reduction Dividend
Slide 5: Built to Deliver Strong Cash Margins in Any Price Environment
BUILT TO DELIVER STRONG CASH MARGINS IN ANY PRICE ENVIRONMENT $6.64 53% 53% 54% 52% Average Henry Hub Price 50% 50% Cash Margins (Hedged) 49% ($/MMBtu) $3.09 $2.63 $3.84 $2.74 $2.08 $2.10 2018 2019 2020 2021 2022 2023 3Q24 YTD Hedging Strategy Protects Realized Pricing Bolt-On Acquisitions Replace P
Slide 6: A Modern Technology Platform Built for Growth
A MODERN TECHNOLOGY PLATFORM BUILT FOR GROWTH Modern Field Developing a Scalable Platform Management Philosophy with Low Total Cost of Ownership Common Systems enhance process efficiency, reliability Cloud First / Wireless First eliminate technical debt, and improves data collection, warehousing
Slide 7: Corporate Infrastructure… Our Valuable Advantage
CORPORATE INFRASTRUCTURE… OUR VALUABLE ADVANTAGE Unique Infrastructure PLATFORM Built to be Accretive Consolidator Field Operations Midstream/Marketing Corporate Emissions Reduction Well Retirement Significant Operating Scale Top 25 Natural Gas Marketer Production Support Suite Deploying Cutting Edg
Slide 8: Growth Through Low-Risk, Low-Decline Production
GROWTH THROUGH LOW-RISK, LOW-DECLINE PRODUCTION Adding Operating Scale in Central Region Oaktree Capital Mgmt. $410 Million Acquisitions add >350 MMcfepd of high-margin production Net Purchase Price $377 million 3.0x Kansas Net Production 122 MMcfepd NTM EBITDA Multiple(a) NTM Cash Flows(a) $126 Mil
Slide 9: Realizing Geographic Benefits with LNG Exporter
REALIZING GEOGRAPHIC BENEFITS WITH LNG EXPORTER Inaugural Contract Highlights Opportunity Set Positioned for Gulf Coast LNG Exports Proximity of assets to Gulf Coast makes Diversified an ideal partner to supply natural gas to global LNG exporters Asset location ideal for additional LNG supply agreem
Slide 10: Unlocking Value of Undeveloped Acreage
UNLOCKING VALUE OF UNDEVELOPED ACREAGE 8.6 Million Net Acres within Operating Footprint Significant Oklahoma Leasehold Position 99.9% of all acreage currently held-by-production with With ~$23 million of land sales recorded in 2024(b) minimal portfolio exposure to state or federal lands Undeveloped
Slide 11: Financial Highlights
Financial Highlights . DIVERSIFIED energy
Slide 12: Relentless Focus on Increasing Value
RELENTLESS FOCUS Average Production of 829 MMcfepd • Quarter benefitted from contribution of Oaktree and Crescent Pass Assets ON INCREASING VALUE • Maintained consolidated production decline of ~10% per year 3Q 2024 Operating Highlights Total Revenue, Inclusive of Hedges of $239 million • $685 milli
Slide 13: A Distinctively Capital-Efficient Business Model
A DISTINCTIVELY CAPITAL-EFFICIENT BUSINESS MODEL 44% 35% Annual Production Decline (%) Peer Average 33% 30% 25% 26% 22% 24% ~10% DEC Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Capital 11% 73% 57% 58% 91% 83% 64% 110% Intensity Superior Capital Intensity Enhanced Free Cash Flows Greater Value C
Slide 14: Committed to Delivering a Foundation of Free Cash Flow
COMMITTED TO DELIVERING A FOUNDATION OF FREE CASH FLOW 42% 37% 29% Nine months ended September 30, 2024 Free Cash Flow Conversion 18% 8% 7% (3)% Diversified leads Natural Gas E&Ps in Free Cash Flow conversion with 5x the peer group average (35)% DEC Nat Gas E&P A Nat Gas E&P B Nat Gas E&P C Nat Gas
Slide 15: Advantageously Hedged for Maximized Cash Flows
ADVANTAGEOUSLY HEDGED FOR MAXIMIZED CASH FLOWS Hedging Continues to Benefit Adj. EBITDA Margins Hedge Coverage Aligned with Forward Strip Avg Hedge Floor $3.34 NYMEX Strip 80% % Hedged +45% 70% +95% $3.58 $3.66 $2.16 $3.22 $3.15 $3.16 $3.18 $/MMBtu $1.71 Avg Hedge Floor NYMEX Strip 3Q24 Total Cash C
Slide 16: Leverage Appropriate & Tracks to Business Model Attributes
LEVERAGE APPROPRIATE & TRACKS TO BUSINESS MODEL ATTRIBUTES Leverage Profile Typical of Consistent Generation of Strategy Characterized by High Margin Sectors Meaningful Cash Flow Low Capital Intensity 5.7x $585 million of acquisitions in 2024, primarily debt-financed Net Debt / Adj. EBITDA (x) 4.8x
Slide 17: Strategic Rationale for ABS Financings
STRATEGIC RATIONALE FOR ABS FINANCINGS Diversified’s long-life, low-decline and high-quality reserves Provides stable and predictable cash flows for investors ABS Benefits to Diversified An established track record of stable asset performance Key Attributes for Investors Characteristics of Diversifi
Slide 18: Retirement of Debt Principal Unlocks Equity Value Over Time
RETIREMENT OF DEBT PRINCIPAL UNLOCKS EQUITY VALUE OVER TIME Net Debt and Amortization Market Capitalization Market Cap 12% Decrease Share Price at Current Multiple (4.0x) in Borrowings 9% Decrease ($) Share Price at Historical Multiple (5.6x) $1,691 Mn in Borrowings 19% Increase $1,495 Mn in equity
Slide 19: A Compelling Investment Opportunity
A COMPELLING INVESTMENT OPPORTUNITY Discuss highlights, how to Potential for significant multiple Ability to unlock additional hidden value Historical multiple implies ~US$29 price add comparison to trailing expansion in portfolio provides catalyst for re-rating or 130% upside from recent levels(a)
Slide 20: Changing the Mindset of Modern Production Management
CHANGING THE MINDSET OF MODERN PRODUCTION MANAGEMENT Diversified IS… Diversified IS NOT… A responsible steward of PDP assets which leverages technology A negligent operator of aging properties that disregards and scale to enhance operations and mitigate or reduce emissions individual well performanc
Slide 21: "And" – We Can Deliver Results to Multiple Stakeholders
“AND” – WE CAN DELIVER RESULTS TO MULTIPLE STAKEHOLDERS Generation of High Cash Margins Reduction of Methane Emissions Modern field management drives efficient operations Every molecule retained increases sale volumes PDP strategy at scale produces significant and sustainable cash margins due
Slide 22: Corporate
Corporate 1600 Corporate Drive Birmingham, Alabama 35238-1087 (USA) div.energy Douglas Kris Wren Smith Senior Vice President Senior Manager Investor Relations & Investor Relations Corporate Communications dkris@dgoc.com cwsmith@dgoc.com +1 973 856 2757 +1 205 315 0553
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