Diversified Energy Company PLC

For the first quarter of 2026, Diversified reported total commodity revenue of $556 million, adjusted EBITDA of a record $287 million, and an adjusted EBITDA margin of 68%. Adjusted free cash flow was $160 million, and the company said it repaid about $92 million of debt principal and returned about $94 million to shareholders through dividends and share repurchases. Production averaged about 1.2 Bcfe per day, with a March exit rate of about 1.23 Bcfe per day. Full-year 2026 guidance was reiterated: 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. Management said the recently closed Sheridan acquisition and the announced Camino transaction are not fully reflected in those guidance figures.

Rusty Hutson framed Camino as a defining, shareholder-friendly transaction that uses innovative financing to access a large asset without equity issuance or consolidated leverage. He emphasized that the deal preserves 100% ownership of the undeveloped acreage, gives Diversified 40% of SPV residual cash flow, and creates a path to buy out Carlyle later as the asset delevers. His tone was highly confident and expansionary, saying the company is stepping up when others are pulling back and that the opportunity set is larger than ever.

Brad Gray focused on the quarter’s financial execution and balance-sheet flexibility. He cited $556 million of commodity revenue, $287 million of adjusted EBITDA, 68% margin, $160 million of adjusted free cash flow, net debt of about $2.7 billion, pro forma leverage of 2.2x, and about $529 million of liquidity. He said the leverage ratio sits within the company’s 2.0x to 2.5x target range, and reiterated that the company repaid $92 million of debt principal while maintaining capacity for acquisitions and shareholder returns.

Analysts pressed management on how and when Diversified might choose to run an operated rig on Camino acreage versus using acreage sales or joint ventures. Management said all three options are on the table, that they are seeing interest from multiple counterparties, and that a decision will be driven by economics and IRR hurdles rather than a fixed timetable. Questions also focused on the SPV mechanics and a possible buyout of Carlyle; management said the undeveloped acreage stays 100% with Diversified, the SPV holds the PDP wellbores and debt, and a buyout would depend on delevering, asset maturity, and the right timing for future growth. Analysts also asked about the scope of the Continental JV and whether Carlyle’s $2 billion framework caps future activity; management said the agreement is effectively flexible, with no practical restriction on the broader opportunity set.