Diversified Energy Company PLC

For the first quarter of 2026, total commodity revenue was $556 million and adjusted EBITDA was a record $287 million, with adjusted EBITDA margin at 68%. Adjusted free cash flow was $160 million, and the company said that was burdened by about $11 million of transaction costs and February gas pricing volatility. Production averaged approximately 1.2 Bcfe per day, with a March exit rate of about 1.23 Bcfe per day. Net debt was about $2.7 billion, pro forma leverage improved to 2.2x, and liquidity was about $529 million. For full-year 2026, guidance was reiterated at production of 1.17 MMcfe to 1.21 MMcfe per day, adjusted EBITDA of $925 million to $975 million, adjusted free cash flow of approximately $430 million, and total capex of $205 million to $235 million, including nonoperated capex of $135 million to $155 million and maintenance capex of $70 million to $80 million. Management said the recently closed Sheridan acquisition and the Camino transaction are not fully reflected in guidance.

Rusty Hutson framed Camino as a defining, shareholder-friendly transaction because it gives Diversified access to a $1.175 billion asset with limited balance-sheet impact and no equity issuance. He repeatedly emphasized optionality: Diversified keeps 100% of the undeveloped acreage, can earn fees and promote economics, and has a future path to buy out Carlyle as the assets mature and delever. His tone was confident and expansionary, arguing the company is in a strong position to keep doing larger deals while preserving discipline.

Brad Gray highlighted the quarter’s operating strength, pointing to $556 million of commodity revenue, $287 million of adjusted EBITDA, 68% margin, and $160 million of adjusted free cash flow. He noted $92 million of debt principal repayment, net debt of about $2.7 billion, leverage of 2.2x, and liquidity of about $529 million, which he said leaves the company within its 2.0x to 2.5x target. He also reiterated full-year guidance and said the Sheridan and Camino transactions are not yet fully included in those figures. On Camino, he underscored the off-balance-sheet structure, 60%/40% SPV ownership, and the fact that the undeveloped acreage sits 100% with Diversified.

Analysts focused on how the Camino structure works, when Diversified might run an operated drilling program, and when the company could buy out Carlyle’s stake. Management said the acreage gives them several options—sale, JV, or running a rig—and that they are not committed to any one path, but the timing would not be years away if they move ahead. On the SPV, Brad Gray clarified that the SPV owns the PDP wellbores and debt, while Diversified owns the undeveloped acreage outright. Management also said the Carlyle framework could be the dominant funding route for larger deals, while smaller bolt-ons may still be done on balance sheet.