Diversified Energy’s Share Price Dropped 9.21% on FY ’23 Results

The Diversified Energy Company PLC (LON: DEC) share price dropped 9.21% after the company released its audited results for the financial year ended 31 December 2023. In addition, the company also announced a conditional deal with Oaktree Capital Management, L.P., to acquire specific working interests in assets located in the Central Region.

This strategic move is accompanied by a refreshed approach to capital allocation to fortify the balance sheet and ensure ongoing value creation for shareholders. The year brought forth outstanding achievements for Diversified Energy, which were marked by a series of operational and financial milestones.

The company reached an all-time high in average daily production, recording 821 MMcfepd (137 MBoepd), with a December exit rate of 775 MMcfepd (129.2 MBoepd). It maintained a peer-leading consolidated production decline rate of approximately 10%. Year-end reserves stood at 3.8 Tcfe (642 MMBoe), with a present value of $3.2 billion.

Diversified Energy posted a net income of $760 million, factoring in $688 million in non-cash, tax-effected derivative adjustments. Adjusted EBITDA hit $543 million, contributing to a substantial free cash flow of $219 million and an EBITDA margin of 52%. 

Total revenue increased by 2% to $1 billion, bolstered by $178 million from commodity cash hedge receipts. The company finished the year with $139 million in liquidity and a 2.3x leverage ratio.

Diversified Energy met its 2030 methane intensity reduction target seven years early, achieving a 50% reduction from 2020. The company's methane emissions intensity significantly improved, earning accolades, including the ESG Report of the Year at the 2023 ESG Awards and maintaining its Gold Standard in emissions reporting from OGMP 2.0.

It also upgraded its MSCI sustainability rating to AA, reflecting its commitment to environmental stewardship. 

The acquisition from Oaktree is a testament to Diversified Energy's ambitions for strategic growth. It consolidates its presence in the Central Region with an additional 510 Bcfe of proven developed producing (PDP) reserves.

The takeover, valued at around $410 million ($386 million net), augments the company's production by approximately 122 MMcfepd and strengthens its financials with an expected Adjusted EBITDA of $126 million for 2024.

Since 2017, Diversified Energy has returned over $800 million to its shareholders, a testament to its commitment to delivering value. This includes around $700 million in cash dividends and $110 million through share buybacks.

Diversified Energy share price. 

The Diversified Energy share price dropped 9.21% to trade at 837.75p from Monday’s closing price of 922.75p.