Diversified Energy Company

Greetings and welcome to the Diversified Energy 2025 Annual Results Conference Call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Douglas Criss, SVP, IR, and Corporate Communications. Thank you, Douglas. You may begin.

Good morning, and thank you all for joining us today, and welcome to our fourth quarter and full year 2025 results conference call. With me today are Diversified's founder and chief executive officer, 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 February 27, 2026. Certain statements made on today's call are forward-looking and may be subject to risks and uncertainties relating to future events and the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC including the annual report on Form 10-K for the fiscal year ended December 31st, 2025, filed on February 26th, 2026. During this call, we also referenced certain non-GAAP financial measures. Our disclosures regarding those items are found in our earnings materials, on our website, and in our regulatory filings. I will now turn the call over to Rusty.

Thank you, Doug, and thank you all for joining the call today. Before diving into the recap of the year and the fantastic operational and financial results that we posted last night, I want to start the call today with some opening remarks around our strategy, our culture, and a theme that we believe fits well with our accomplishments in 2025. We are proven. I believe we are an inflection point for our industry and for our company. The landscape is changing rapidly, not only in upstream, but the entirety of the energy value stream. Consolidation is accelerating. Volatility in commodity prices, especially natural gas, is increasing. Competition has never been more intense, and the choices we're making right now matter more than ever. But in the 25 years since I found a diversified energy, I believe we are in the best position we have ever been in. I'm truly excited for the future and the next 25 years of Diversified. As a founder and CEO of our company, I'm extremely proud of the business we have built, the professionalism of our team, the quality of our assets, our sound financial condition, and the strength of our business model. Importantly, a ticker symbol doesn't drive results. People do. Diversified is a leader, an innovator, a pioneer because of the talent, skill, tenacity, and capabilities of every member of our team of professionals. Whether in the field or at a desk, Diversified is a leader because we trust our people and empower them to do their very best work. Our people are the track record. They are the results. They are the proof. And we are proven. For those of you following along with our year-end 2025 results slide deck, which we posted to our IR website last night, I plan to 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 closing thoughts before opening the call for your questions. Starting on slide three, given current market dynamics, especially related to the energy sector, I believe it's important for analysts, investors, and all stakeholders to understand, in simple terms, the investment opportunity we offer. As the founder, I was the first investor 25 years ago. I used my home equity to purchase a small package of wells in West Virginia, which led to a $50 million initial public offering in 2017. Today, I still hold all my shares as the largest individual shareholder, with company insiders holding approximately 6% of the shares outstanding, demonstrating the team's belief in the quality of our company and the future prospects for our business. I will not go through all of the investment qualities listed on this slide, but the six simple attributes that Diversified possesses are not only what we provide, but also what we deliver, and ultimately tie back to a simple statement listed here as number one. Diversified is the first and currently only publicly traded company focused on acquiring, operating, and optimizing established cash generating energy assets. We believe the first mover competitive advantage we built continues to bolster our business and is a key component in the record results we achieved in 2025, while allowing us to continue creating value as a proven business model and a compelling investment thesis. For the past 25 years, we focused on acquiring and operating cash generating energy assets so that we could provide our investors with a consistent and reliable return. We know that this proven focus provides investors with a unique and lower risk method of investing in oil and gas assets, and I am proud that we were and are the leader in this strategy. Turning to slide four, as we look further across the subsectors of the energy investment landscape, it's important to recognize that Diversified exhibits several of the positive investment attributes of these subsectors, while notably delivering a significantly higher free cash flow yield. We believe these attributes represent a straightforward thesis for a multiple re-rate in our shares as we currently trade on average three turns below those other cash generative sub-sectors of the overall energy industry. Given this low relative valuation, we believe our shares offer a triple threat of attractive investment style. As a value stock that trades at an attractive four times EV to EBITDA multiple, and over 25% free cash flow yield. As a growth stock with attractive top-line revenue growth of over 140% and free cash flow growth of over 110% year-over-year, and as an income stock with an attractive current dividend yield of approximately 8%, our company remains a unique yet consistent and proven investment opportunity. Turning to slide five. When we view the high-level recap of the past calendar year, three words come to mind. Innovation, transformation, and focus. Innovation from the Mountain State Plugging Fund and Carlisle Strategic Financing Partnership. Transformation from the approximately $2 billion in accretive acquisitions inclusive of Maverick Natural Resources and Canvas Energy. Focus from delivering on goals to improve financial leverage, expand our investor universe, and achieve multi-year sustainability performance. It's impressive to know that we delivered success during a time of commodity, geopolitical, and financial market volatility, and equally impressive that it was all done in one year. Once again, it illustrates we are proven. Turning to slide six, we are kicking off 2026, continuing to execute on our proven acquisition playbook and I will spend a few minutes on the specifics of the deal we announced last evening. We are excited to announce the acquisition of Sheridan Production Partners, a privately held company with assets in East Texas, including a bulk of its leasehold and production in Panola and Harrison counties. As you can see from the map, the acquisition is a true bolt-on to our existing operations and has the potential to create significant value above the purchase price through the combination of high-quality assets, with our proven operating model. We are acquiring an additional 61 MMCFE per day of natural gas production in the South Africa Gulf Coast region, and notably in proximity to our 120 MMCF per day black bear processing facility. We are acquiring Sheridan for approximately 245 million, which represents a PB15 valuation. The acquisition is being funded with our current liquidity, which we announced last evening was approximately $577 million. This established producing asset has an extremely low corporate production decline profile of approximately 6% and is anticipated to contribute approximately $52 million in next 12 months EBITDA during calendar year 2026. We believe this accretive acquisition offers a tremendous opportunity, adding continuous acreage in the operating region, delivering strong, stable production with estimated reserves of approximately 397 BCFE, an immediate line of sight to operating efficiencies from our smarter asset management, and the ability to capture meaningful synergies from the increased asset density and field operations, integrating processes and systems under our one DEC platform and consolidating corporate functions. We anticipate the acquisition closing during the second quarter of 2026, and look forward to integrating these high-quality assets into our asset base. Turning to slide seven, as we discussed throughout 2025, we established a goal to move our primary listing, reincorporate it in the U.S., and publish U.S. GAAP financials as an SEC-regulated accelerated filer. With our SEC 10-K filing last evening after the New York Stock Exchange market closed, We fully achieved our listing and reporting objectives going hand in hand with our 25 year milestone as an operating company. This achievement and formal move to the US markets marked a new chapter and provide the company with a larger stage to further expand its investor base and ultimately create the opportunity to increase the value of our business. As I reflect on the history of our public company journey, As a public company over the past approximately nine years, the sheer magnitude of our growth in operational and financial scale and capabilities reinforces the art of the possible with our get stuff done culture. And I'm excited for what we can accomplish in the future. Turning to slide eight, our proven business model continues to deliver on our four key pillars of our capital allocation priorities, which are as follows, systematic debt reduction, return of capital through dividend distributions and share repurchases, and growing our portfolio of cash-generating assets through accretive strategic acquisitions. As you can see here on this page, we reinforced our track record on all of our priorities for shareholders in 2025. During 2025, we repaid approximately $277 million in principal. We returned approximately $185 million to shareholders through dividends and and strategic share repurchases representing approximately 16% of our current market capitalization. Worth noting, we have demonstrated a track record of robust and disciplined capital allocation with approximately $2.3 billion in shareholder returns and debt principal repayments since our IPO in 2017. 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 demonstrate the power of our disciplined and flexible capital allocation priorities and the quality and consistency of the cash generation capabilities of our portfolio of assets. We will remain focused on our key strategic pillars. With that, I'll turn the call over to Brad to discuss our financial performance and portfolio optimization results in greater detail.