Diversified Energy posts record year, announces east Texas acquisition

(Sharecast News) - Diversified Energy reported record annual results for 2025 overnight on Friday, with more than doubling of adjusted EBITDA and free cash flow following around $2bn of acquisitions, while announcing a further $245m bolt-on deal in east Texas and maintaining its quarterly dividend at 29 cents per share. The US-focussed producer, which is listed in London and New York, posted full-year adjusted EBITDA of $956m, up 103% from $470m in 2024, on total revenue of $1.83bn, up 142%.

Net income was $342m compared with a $103m loss a year earlier.

Adjusted free cash flow rose 110% to $440m after $55m of transaction costs, while operating cash flow increased to $465m.

Average production rose 37% to 1,086 MMcfepd, or 181 Mboepd, with fourth-quarter output up 42% year-on-year to 1,198 MMcfepd.

Fourth-quarter revenue increased to $667m from $59m a year earlier, while net income was $196m against a loss of $106m in the prior-year period.

Adjusted EBITDA rose 83% to $254m and adjusted free cash flow climbed 187% to $152m.

The group said the results exceeded the upper end of its revised guidance ranges for adjusted EBITDA and adjusted free cash flow.

"We are pleased to report that these results exceeded the upwardly revised guidance range for adjusted EBITDA and adjusted free cash flow, demonstrating once again our culture of execution and accountability," said chief executive Rusty Hutson Jr.

During the year, Diversified completed the roughly $2bn acquisitions of Maverick Natural Resources and Canvas Energy, helping to more than double adjusted EBITDA and free cash flow and lifting pro forma adjusted EBITDA to around $1.2bn with more than 1.2 Bcfepd of production.

The company said it captured more than $60m of synergies from Maverick and over $20m from Canvas.

Its balance sheet strengthened, with the leverage ratio improving by around 23% to 2.3x at year-end 2025.

Diversified retired $277m of principal under certain asset-backed securities facilities and ended the year with $577m of liquidity.

Around 73% of consolidated debt was non-recourse ABS securities.

The company returned more than $185m to shareholders through dividends and share repurchases during 2025, including the buyback of around 7.3m shares, or roughly 10% of the outstanding total, for about $100m.

Its board authorised a new repurchase programme of up to 7.8 million shares.

A fourth-quarter dividend of 29 cents per share was declared, payable on 30 June to shareholders on the register on 29 May, with a sterling currency election available.

Hutson said the company's 2026 guidance "reflects continued disciplined growth, portfolio optimization, and strong free cash flow generation as we look to unlock additional shareholder value from our high-quality assets", adding that Diversified's portfolio was aligned with "power generation, data centers, and LNG export".

Separately, Diversified said it had agreed to acquire high-working interest, gas-weighted producing assets in east Texas from Sheridan Production for $245m in cash, funded from existing liquidity.

The assets were expected to add around 62 MMcfepd of 2026 production with low annual declines of about 6%, approximately 397 Bcfe of proved developed producing reserves and estimated next-12-month EBITDA of around $52m.

It said the net purchase price represented an estimated PV-15 valuation, with PDP reserves carrying a PV-10 of $310m.

"The target assets are a perfect fit with our existing East Texas operations and offer meaningful opportunities for material synergies upon completion of the acquisition," Hutson said, adding that the deal was "consistent with our strategy to focus on acquiring high-quality, low-decline producing assets at attractive valuations."

Completion was expected in the second quarter, subject to customary conditions.

At 1011 GMT, shares in Diversified Energy Company were up 1.75% at 991p.

Reporting by Josh White for Sharecast.com.