Diversified Energy Company

Greetings, and welcome to the Diversified Energy 2025 Interim Results Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the following presentation, and you may be placed into question queue at any time by pressing star one on your telephone keypad. We ask that you please ask one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Douglas Criss, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.

Good morning, and thank you all for joining us today, and welcome to our second quarter 2025 results conference call. With me today are Diversified's founder and CEO, Rusty Hudson, and President and Chief Financial Officer, Brad Gray. Before we get started, I will remind everyone that the remarks on the call reflect the financial and operational outlook as of today, August 11th, 2025. These outlooks entail assumptions and expectations that involve risks and uncertainties. A discussion of these risks can be found in our regulatory filings. During this call, we also referenced certain non-GAAP and non-IFRS financial measures. Our disclosures regarding these items are found in our earnings materials, on our website, and in our regulatory findings. I will now turn the call over to Rusty.

Thank you, Doug, and thank you all for joining the call today. We believe diversified energy offers a unique investment opportunity. A resilient business model focused on optimizing cash flow from low decline energy assets enhanced by growth from strategic acquisitions and a disciplined capital allocation. I want to highlight and emphasize that we have significantly transformed and strengthened our company since the start of the year, most notably with the Maverick Natural Resources acquisition. Our growth through the acquisition model has demonstrated how a material change in scale can provide the operational leverage to deliver robust cash flows that ultimately create value for all shareholders. This generated value is evidenced by our growth in EBITDA and cash flow, which nearly doubled year over year, and our increased guidance on run rate synergies following our first full quarter with Maverick, demonstrating our focused approach to driving operational efficiencies through the integration of new assets. I want to commend the efforts of our employees, their hard work and determination allow us to deliver outstanding results and live by our culture of getting stuff done, which is helping us to be 1-0 every day. Notably during the quarter, Southern Appalachia experienced dramatic flood damage. Yet while our operations were impacted, these committed employees not only worked to minimize production downtime, but also devoted significant efforts to help those in the communities where they work and live. Our team has positioned Diversified for an exciting future. I am confident we will continue to deliver compelling operational and financial results. Additionally, while we recognize the increased volatility stemming from tariffs, geopolitical disturbances, and other external factors, we do not see a material impact on Diversified's fundamental business. Importantly, we continue to focus on what we can control. operating and optimizing our portfolio of assets to create a scalable business model with highly reliable production and consistent cash flow, which delivers certainty and dependable returns to debt and equity investors alike. While the market for oil and natural gas producers has remained volatile throughout 2025, we know that if it's hard, there's opportunity. For those of you following along with our second quarter 2025 results slide deck, which we posted to our IR website this morning, I will cover a few slides and then turn the call over to Brad to discuss highlights from our financial results. After Brad's remarks, I will provide some additional thoughts on our valuation and guidance for 2025 before opening the call for your questions. Starting on slide three, we continue to focus our capital allocation strategy around four key pillars that are deliverables to judge us by. Systematic debt reduction, returning capital to shareholders through dividend distributions and share repurchases, and growing our portfolio of cash generating assets through accretive and strategic acquisitions. As you can see here, we continue to build that credibility in 2025. Debt principal reduction totaled approximately $130 million during the first half of 2025. Additionally, we returned approximately $105 million to shareholders in the form of dividends and strategic share repurchases. Worth noting, we have a demonstrated track record of shareholder returns with approximately $2 billion in shareholder returns and debt principal repayments since our IPO in 2017, or approximately 1.6 times our current market capitalization. We have also increased our total approved reserves by 65% since year-end 2024, illustrating the strength, resilience, and value of our asset base. Importantly, we believe our shares remain a compelling investment at current levels, and we will continue to take advantage of the current cycle and market dislocation to opportunistically repurchase shares. Together, these actions in 2025 represent a return of approximately 20% of our current equity market cap, demonstrating the power of our disciplined and flexible capital allocation strategy and the quality and consistency of our portfolio of cash generating assets. We accomplished all this while integrating our transformational Maverick acquisition. With deal related expenses behind us and a line of sight to synergy capture in the second half of the year, we are well positioned to continue to be a market leader in returning capital to stakeholders. We believe our capital allocation strategy balances investment in the business and portfolio growth initiatives while enabling a tangible shareholder return framework, all of which creates long-term value for our stakeholders. We continue to demonstrate that Diversified is a focused company that invests in cash generating assets in the energy industry, and we will remain focused on our key strategic pillars. Turning to slide four, with our strong liquidity and our recently announced capital deployment partnership with Carlyle, Diversified has unmatched operational scale as well as an advantageous cost of capital and surety of capital positioning Diversified to support accretive acquisitions in a growing divestiture market. We have now coupled our operational excellence focus culture with a track record of margin enhancement and earnings growth with a global investment leader, the Carlyle Group. Through this partnership, we intend to prioritize the accretive acquisition investment capital to grow our PDP asset portfolio and optimize returns through synergy capture and portfolio optimizations. Carlyle has historically been an investor in our ABS securitizations, and we are pleased with the expanded relationship that we have created along with the shared vision of the potential opportunity set ahead. As the PDP champion in the United States, we continue to see a robust opportunity set ahead in the coming years. The combination of maturing assets and M&A activity leading to growth-oriented EMPs recycling capital through divestment of assets, in many cases mature producing assets, there remains an ample opportunity for diversified continued growth. Additionally, given our industry-wide reputation as a professional and responsible operator of large portfolios of energy producing assets and the current upstream market dynamic of EMPs making acquisitions to backfill and expand undeveloped inventory, Diversified provides a creative and actionable solution as a PDP partner in a joint acquisition. With this partnership with Carlyle, we now have line of sight to fund up to an initial $2 billion worth of acquisitions without raising a single new share of equity capital. That's a powerful endorsement of our abilities and our strategy and a clear path to non-diluted growth. Turning to slide five, I was pleased to have the opportunity to attend the inaugural Appalachian Energy and Innovation Summit held in Pittsburgh a few weeks ago. There continues to be growing excitement on the demand pool of data center development within the entirety of the Appalachian region. The pledge headline investment within Pennsylvania alone has the potential to provide a generational economic impact which can ultimately drive regulatory and legislative streamlining. Our proximity to emerging data center hubs positions us to benefit from rising natural gas demand, whether through direct supply agreements or improved basin pricing. Notably, in-basin natural gas differentials have already shown improvement. If you believe in the secular trends of natural gas power, energy demand, data center build-out, and LNG growth, then you should be bullish on Diversified. With that, I'll turn it over to Brad to discuss our financial performance and portfolio optimization results in greater detail.