Diversified Energy Company results show ‘another productive year of growth’

Diversified Energy Company PLC (LSE:DEC, OTCQX:DECPF) (DEC) reported record production and strong cash flow generation in its final results for 2022.

The company, which has built a portfolio of oil and gas assets in the United States, said production averaged 135,000 barrels oil equivalent per day (boepd) in the 12 months ended 31 December.

At the end of 2022, the daily rate had grown to 141,000 boepd.

The company reported earnings (adjusted EBITDA) of US$503mln with free cash flow marked at US$219mln. That was on US$1bn of revenue inclusive of hedging – it had US$896mln of cash commodity hedges, tallying to a total revenue of around US$1.9bn.

“2022 was another productive year for Diversified, growing our high-quality asset base, optimizing our production, continuing our vertical integration, generating significant free cash flow, and returning meaningful capital to shareholders through dividends and share repurchases,” chief executive Rusty Hutson said in a statement.

“We delivered a 49% increase in total hedged revenue resulting in approximately 50% margins for the fifth consecutive year, driven by our disciplined hedging strategy.

“This translated into Diversified ranking in the top 20 of total shareholder returns in the FTSE 250 for the year.”

DEC paid out US$144mln in dividends, at 17 cents per share it was up 6% on the prior year, and said it will recommend a final dividend of 4.375 cents.

Asset acquisition saw DEC increase the value of its reserves by 61%, with the firm retaining some 830mln barrels of reserves at the end of 2022.

It noted that a total of US$566mln in asset acquisitions were completed, including deals that closed in February 2023.

Hutson, meanwhile, highlighted that in 2023 the company is “in a strong position for the expanding opportunity set that lies ahead”.

“Our prudent hedge position of approximately 85% of the year’s current production with a floor of approximately US$3.83 per thousand cubic feet (Mcf), well above forecasted prices, will allow us to manage the current low-price environment.

“At the same time, we remain incredibly optimistic about the long-term outlook for natural gas.

“We are laser-focused on our strategy of consolidating mature assets at attractive multiples while enhancing our margins through vertical integration of the energy value chain from production to retirement.

“We have built a company that provides safe, reliable, and responsibly produced energy while delivering meaningful value to shareholders.”