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.

Thank you, Rusty. I share Rusty's excitement for Diversified's future, and my confidence in our teams, in our assets, and in our ability to generate consistent, reliable cash flow has never been higher. I appreciate the dedication and commitment of our teams to deliver quality results each and every day. We'll now turn to slide nine. Before sharing the highlights of our financial and operational results for the full year 2025, I would like to focus on the right side of this slide. This presentation very simply illustrates how our accretive growth of cash generating energy assets paired with best in class operational and corporate infrastructure translates into material bottom line growth. I'll start with production. The daily production exit rate for December was approximately 1.25 BCFE per day, and our production for the year averaged approximately 1.1 BCFE per day. The growth in our low decline resilient production base has put the company in a great position to participate in LNG exports and data center energy demand, and to benefit from the growing demand from our products while continuing to supply energy to our local communities and our commercial customers. And our vertically integrated marketing team provides us with a terrific strategic advantage to get our products to market at the highest possible margin. Total revenue was 1.83 billion and adjusted EBITDA was $956 million for the year. beating our stated guidance and with our adjusted EBITDA margin landing at 58%. Our adjusted EBITDA was a record for our company. And as the one member of our leadership team who joined Rusty before our public offering, I'm very proud of the quality and scale of the company that we have built. Notably, our portfolio optimization processes, or better known as the POP processes, allowed us to generate approximately $170 million in additional cash proceeds. These results are exciting to reflect on, but the real excitement is about the opportunities in front of us and the capabilities of our team to capture those opportunities. Our adjusted free cash flow for 2025 was $440 million, which was burdened with approximately $55 million of transaction costs. Our net debt stood at approximately 2.8 billion at year end, and we improved our overall leverage by over 20% to 2.3 times since year end 2024, which allowed us to achieve a leverage ratio within our target level of two to two and a half times net debt to EBITDA. With approximately $577 million in liquidity, Our balance sheet strength is providing us the optionality and the flexibility to navigate and take advantage of the opportunities that we believe are available, notably the Sheridan acquisition. Additionally, our investment grade rated non-recourse ABS notes help contribute to our financial resilience and ensure we maintain our discipline to consistently repay outstanding debt. of which we repaid approximately $277 million in 2025. In summary, our team's strong execution of our strategy to acquire and optimize stable, consistent, cash-generating energy assets enabled strong free cash flow generation and allowed us to continue to prioritize returning capital to shareholders and paying down debt. Turning to slide 10, one can simply describe Diversified Energy as the E&P company without the E. Our model provides a de-risk option, which focuses on optimization and innovation in order to deliver outside results and longer term financial resilience in any commodity price environment. And on this page, we are zooming out on that multi-year track record of several key financial metrics and bottom line fundamentals that have created per share value for our investors. Notably, a prudent and disciplined strategy to capitalize and integrate acquisitions has delivered a 12% compounded annual growth rate in EBITDA per share, an 11% growth rate in cash flow from operations, and an 8% growth rate in free cash flow per share. We believe that these metrics reinforce that our business model is proven. This slide also illustrates how we've been able to generate a solid return of capital for investors by utilizing a more flexible capital allocation framework, which incorporates both strategic share repurchases and consistent dividends. Turning to slide 11 now. One of the main benefits of our disciplined acquisition strategy is that we have created multiple drivers of cash flow generation and growth. Our expanded asset portfolio benefits from a low decline production profile, commodity diversification, a disciplined hedging program, and material upside from anticipated operational and administrative synergies that we generate from our scale and vertical integration. The key metrics at the bottom of this page highlight the impact of our disciplined acquisition framework and the power and advantage that vertical integration and scale provide meaningful value to our shareholders. We have delivered year over year growth in free cash flow. while also reducing overall leverage. And this was a terrific achievement for our team in such a short period of time. This simple yet proven strategy of acquiring assets at attractive valuations using low cost investment grade rated financing allows us to capture a spread and with our operational excellence and portfolio optimization, improve our return on investment. With this proven playbook, we have and plan to continue building a resilient platform of cash flow generating assets. Turning to slide 12 now, our proactive portfolio optimization program, or our POP, is a continuous evaluation and execution process for us. Since 2023, we have taken advantage of increasing opportunities. to monetize the large inventory of undeveloped acreage that we have accumulated, which notably was ascribed zero value as part of our acquisition processes. We utilize our deep operator relationships and market experience to generate additional unlevered free cash flow to deploy toward value creating opportunities. During 2025, we have generated approximately $160 million in divestment proceeds, and we've repositioned that cash for strategic share repurchases and two highly accretive acquisitions, which meaningfully lowered our leverage. Moreover, the cumulative $314 million in proceeds from portfolio optimization in the last three years has enhanced our return on investment by approximately 10% for the $3.7 billion of acquisitions that we completed since entering the central region in 2021. Collectively, the numerous optimization opportunities provide cash generating levers to grow our business, increase free cash flow, and bring forward the hidden or unrealized value of our portfolio of assets. And by reallocating the incrementally generated cash flow from our POP programs, we can also support superior shareholder returns. Turning to slide 13. We continue to see robust results and additional value creation from our non-op joint venture partnership specifically in the Western Anadarko Basin. This capital light approach with an industry-leading development partner offers an elegant solution for adding reserve replacement and ultimately free cash flow while delivering a compelling return profile. During 2025, we saw an approximately 60% rate of return on these new wells. which are trending approximately 75% liquids. This additive production meaningfully offsets our approximate 10% annual corporate production decline. For example, we anticipate that non-op production to exit 2026 at just over 12,500 BOE per day. Additionally, we have recently added a new Permian Basin non-op partnership, which provides additional commodity diversification and the potential for even higher project returns. And notably, the upfront proceeds from the sale of the land and the working interest to our Permian development partner offset our capital spending and further increase our ultimate rates of return. Now to slide 14, our stewardship operating model is supported by our long tested smarter asset management practices, which optimizes the cashflow from the assets we acquire through production enhancements and expense efficiency. And our daily priorities require us to look for, find and execute activities that enhance margins. Our daily priorities drive additional cashflow and in the long term, do and will create value for shareholders. These daily priorities, which are safety, production, efficiency, and enjoyment, are unique to Diversified, and they allow us to continue to generate resilient, consistent free cash flow as the PDP champion. The subtitle on the cover of our earnings presentation says, proven, stepping up, when others step away. This statement is about responsible stewardship. We were innovators in buying PDP assets that other companies neglected or lost focus on. Our proven business model steps up to own these assets and make them safer, efficient, and more profitable. Simply stated, optimization is stewardship. So to wrap up my comments, I want to say thank you to all of our teams for their excellent work over the past year. Our company is well positioned to grow and generate consistent cash flow for our shareholders. This positioning of strength is due to hard and smart work from our skilled team of professionals. I will now turn the call over to Rusty for some final thoughts.

Thanks, Brad. Before we take questions, I want to provide some final thoughts on our outlook for 2026 and the milestone of our 25th anniversary. Turning to slide 15, we continue to emphasize we are a differentiated energy producer that seeks to optimize established, often overlooked, and undervalued cash-generating U.S. energy assets. We maximize value in a unique way by minimizing traditional E&P risks, growing our revenue streams, optimizing our asset portfolio, and being good stewards of our capital while generating real, consistent, meaningful cash flow. In 2025, our results were impressive, and we were able to exceed or achieve our guidance on important financial metrics, adjusted EBITDA, and adjusted pre-cash flow. Notably, all of our additional guidance metrics were also within the guidance range. As we embark on our 2026 journey, we have a published full-year 2021 26 guidance seen here on the slide using the same operational and financial metrics. I would note that these guidance metrics do not incorporate the Sheridan production acquisition announced yesterday. Also, as a reminder, we continue to include cash generated from our portfolio optimization programs in adjusted EBITDA and adjusted free cash flow and is anticipated to be approximately 100 million for the full year 2026. Turning to slide 16. When the Founding Fathers set out to build America, they aimed to create something that would last, something rooted in hard work, responsibility, and the belief that what was created must be cared for and nurtured for it to endure. That same belief defines Diversified Energy. As our nation celebrates its 250th anniversary, we celebrate our milestone 25th anniversary. For 25 years, Diversified has stepped up when others stepped away, investing in established energy assets and committing to their full life cycle from production to responsible retirement. We are, at our core, adaptive, out-of-the-box thinkers, innovators, and trailblazers. We pioneered a new way of working using scale and vertical integration, leveraging technology, and flipped the narrative on natural gas and oil production while also maintaining the discipline and predictability required to make our work profitable. This culture, this mindset, this belief has allowed us to transform one company's divestiture into our consistent cash flow. What started as an idea in one small well package acquisition in West Virginia in 2001 has evolved into a 2,200-plus person organization, a sizable publicly traded entity that generates over $2 billion in revenue annually, a top three landholder in the lower 48, and the largest owner of wells in the U.S. We took a different approach to responsible energy production. We were the underdogs, but we proved ourselves. For 25 years, we made our own rules, crafted our own strategy, and created enormous value for stakeholders and shareholders along the way. Now is the moment to consider what we've done and how we got here, what we set out to do, how we were unique, and what we proved. Now is the moment that we give each other a collective high five because we are proven and now others follow us. As America looks ahead, Diversified does the same. We are grounded in our values, focus, experience, and our commitments. With that, I'd like to turn it over to the operator for the Q&A portion of today's call. Operator?

Thank you. We will now be conducting the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We ask that you please limit yourself to one question or one follow-up question. One moment, please, while we poll for your questions. Our first questions come from the line of Neil Digman with William Blair. Please proceed with your questions.

Morning, gentlemen. Nice details. I'm addressing my first question just on cap allocation and Now, in prepared remarks, you kind of gave the rankings, but I'm just quite curious about how you think about you've always had a good dividend. Is there a, you know, sort of an optimal dividend yield that you all target? And then in that same vein, with leverage, you've been able to take that down. Is there, you know, an optimal or kind of a leverage goal as well?

Yeah, no, I don't think we really sit around and think about what our dividend yield is. We have a dividend, fixed dividend that we feel comfortable that The free cash flow we'll support that will give our shareholders a good return. And then, you know, that's where we stay. We don't really look at the dividend yield. That's going to be based on the share price and where it goes, and we just kind of try not to focus on that. We focus on what we feel like we have the financial capabilities of paying with free cash flow. On the other hand, as it relates to leverage, you know, we've stated our business with the type of – funding that we that we use with the abs the asset back securitizations you know we're very comfortable having that two to two and a half range um there's times when it could come down closer to two and there's times where it may go a little higher than that at two and a half but staying within that range is a real is a goal for us and and really important for us as we grow the business through acquisition and neil one thing i would add as it relates to leverage uh

You know, one fact that I would not want anybody to just skate over is the fact that we paid down $277 million worth of debt last year. So our business continually deleverages. It should be close to $300 million this upcoming year. So we continually deleverage and build up equity value in these ABS nodes.

Great, great point. And then my second question just on debt. non-op activity. It seems like you have a lot of, I was going to ask about acquisitions, but I'm just excited on your non-op activity. It seems like there's a lot of upside potential. I mean, whether that's MoveOren and MidCon or others, could you talk about just what you're currently seeing in the non-op? Are you seeing, you know, where, you know, I know there's a sort of non-op writer talked about some private sort of shutting things down. It seems like you're having just the opposite where you're having some sort of fantastic activity. Could you talk about potential upside around your non-op activity?

Yeah, our Western Anadarko, you mentioned, in Oklahoma with Mooborn, we've just seen tremendous results there. The commodity prices haven't affected those IRRs to a level where we would ever think about shutting that down. They're just that good, and we've seen – Great success there. We still have a runway to go. And so we're going to continue to invest alongside of Mooborn in that program. We're also seeing, you know, we mentioned it in our comments, we're the largest leaseholder, one of the largest leaseholders in the lower 48. That gives us a lot of flexibility and a lot of optionality. And so we're leaning into that in our Permian acreage with another non-op partner. and fully expect to invest along the line as we move into 2026 and see some pretty good returns there, especially with the uptick in oil that we've seen here recently. So we're excited about the non-op piece. It allows us to have some organic growth within our portfolio without having to put the G&A cost that running a program ourselves would do And so it's a big piece of what we're going to be doing moving forward.

Very good. Thank you, guys.

Yep. Thank you. Our next questions come from the line of Charles Mead with Johnson Rice. Please proceed with your questions.

Good morning, Rusty and Brad, and to the rest of your team there. Good morning.

Good morning.

Yeah, I'd like to start off with, to ask for a little more color around this, the Sheridan acquisition you guys announced yesterday. It looks like to me that that's an area that has a lot of historic Cotton Valley production, but also it's more recent in the last few years there's been a lot of horizontal Haynesville production there. So I wonder if you could talk about that. When I look at the 6% decline you gave us for that, though, it really suggests to me that there hasn't been a lot of recent drilling, or at least a lot of recent horizontal drilling there. I wonder if you could talk about the nature of that production, what zones it's coming from, how much is horizontal versus vertical, and really one of the things I'm aiming at is an idea of how much undeveloped acreage you guys might have there that's a candidate for your portfolio optimization.

Hey, Charles. The way we've really looked at this acquisition opportunity, it is a perfect strategic bolt-on to our business franchise there in East Texas. We've got tremendous overlap with our field operations, with our midstream business. And so it is a great tuck in where we can add in highly high margin production into that area. Along with it does come some additional acreage. And I think we highlighted that in the press release. So we'll have some opportunities there. And as we've done with our POP program, we'll look for the best ways to bring value forward, whether that's through some type of development or some type of just sale. or some type of non-off relationship. So this is a perfect tuck-in acquisition. It's only $245 million for us. It's adding reserves, and it's also adding incremental cash flow to just the overall corporate cash flow that we produce.

And just to add on to that, it's kind of a mix. It obviously has horizontal wealth in the package. To your point, they haven't been drilled in the last few years. but the other real important factor here is this is in the proximity of our processing facility in that area, and so it gives us some potential upside there to move gas maybe down to our processing facility and get the liquids exposure as well. The other thing I would say is, too, is that You know, this is an area that's gotten really, really active and hot, pretty much the whole area down there. But so as Brad was mentioning, you know, we'll look to find the best value for that undeveloped acreage, whether it be a JV, like he was saying, or a sale or whatever. So there's lots of optionality here, lots of synergies that we can lean into. And really key to our acquisitions, Take an acquisition, pay for it, and get additional value that brings what you paid for it to a better valuation.

Yeah, well, Charles, last comment I'd say is just there's a page in our presentation that talks about the strategic value of in-basin acquisitions, that framework. This one hits every box there.

Yeah, it definitely seems like it could be a good fit. On the financing of it, is this already in process with a Carlisle ABS structure, or what's the state and path forward for the financing?

Yeah, we've got the liquidity on our credit facility to finance this acquisition, and that's our initial plans to close it with that. Got it.

Thank you.

Thank you.

Thank you. Our next question has come from the line of Jonathan Mardini with KeyBank Capital Markets. Please proceed with your questions.

Hi, good morning. Thank you for taking our questions. Just on the non-op side, you said the two non-op partnerships together, they're expected to offset about half of the natural decline in 2026. Just looking forward to How are you thinking about the scale that you'd like to get for these non-op partnerships? For example, would you look to have enough partnership activity to offset all of your base decline?

Well, we'd love that. We'd love it. But you ultimately have to have the programs that make sense and that are, you know, have good rates of return. So these two that we've mentioned have that. And so these would be the two that we're going to lean into. There could be more coming in the future. And, you know, as I've stated, I believe the last call that we did, we're high grading our acreage. We're looking at multiple opportunities to lean into all that value. These are two that are extremely important to us and that are already kicked off, but there could be more coming in the future.

One thing I would say, we did this Canvas energy acquisition at the end of 2024 that came with a lot of acreage and a lot of opportunity. And so with commodity price movement, if there is any commodity price movement upward, that price movement will unlock additional development opportunities for us. So like we said in our comments, we've got a lot of cash generating levers In our portfolio.

The last thing I would say there as well is that don't underestimate Appalachia. We have some acreage in Appalachia that has some really, really good prospects at some point. We're kind of monitoring the situation that's going on there, but it could end up being a big, big win for us up there as well.

I understand. That's helpful context. Thank you. I just want to ask about the asset sales. You previously talked about maybe a $40 or $50 million run rate of asset sales is a good baseline. We saw 2025 come in over $160 million. With the 2026 guidance, including about $100 million of these proceeds, how do you just think about the updated run rate for these land sales? And are you seeing more buyer interest today?

Yeah, I mean, I would say there's buyer interest. Again, we're high grading our portfolio. We're looking at all of our acreage positions. You know, last year was the first year with all the acreage that we had acquired through Maverick and Canvas. This year, we'll have a little more, you know, we've seen a little more interest levels in a couple of things that we didn't anticipate last year. But, you know, I think, Brad, you can comment on this as well. I think 40 to 50 is a run rate type expectation on a normal year?

Yeah, post-2026, we've already issued expectations and guidance on 26 at $100 million. But on a go-forward basis, we believe that $40 to $50 million is a comfortable number. We have a vast portfolio of assets in acreage, and so opportunities come our way very often.

And I find it interesting that a lot of the areas that people didn't think about or didn't really put a lot of attention, all of a sudden are regaining interest levels, and people are starting to come back and look at different things. So that's what gives us comfort in the guidance.

Right. Okay. That's all I had. Thanks for the context.

Thank you. Thank you.

Thank you. Our next question has come from the line of Paul Diamond with Citi. Please proceed with your questions.

Thank you. Good morning, all. Thanks for taking the call. Just drilling down a bit more on the Permian JV. In the central basin, we have a bit more of the details, but is there anything else you can disclose on locations, working interest, expected production run rate through the year, anything like that?

I would say We'll have more data around that after the first quarter. Give us a little time on that. But no, look, it's really close to moving forward here and getting kicked off. And so we'll have better data to kind of help you to drill down more so at the end of the first quarter.

You got it. Understood. And then jumping over, can you talk about one of the bigger news or news pieces last year is the plugging fund. Can you talk about the status of where that sits and, the potential opportunity set and how you go about potentially extending that to other states?

Yeah, I'm still surprised at how that got kind of gotten just kind of blown over by most people. But that was a big win for us, you know, as it relates to asset retirement. We have a really, really good financial assurance policy there now that, you know, we've made our first payment into that. That'll go on for 20 years. We'll continue to plug the wells that we have committed in the state already for the next 20 years as well. We want to utilize that in some of the states where we have the higher well counts for sure, especially in Appalachia mostly. And so we're working to try to get inroads there. I would tell you that there's a couple states that would probably do it very quickly, and we'll probably circle back to them this year. but we're working on one as we speak and really want to get that one squared away. It's a great product. The whole industry should be looking at this as a way to deal with asset retirement obligations long-term. I think even the states themselves with their Orphan Well Program should be looking at something similar. It was a big win for us. Obviously, my relationship with with the politicians in West Virginia gave us the ability to take advantage of that there first. And so we'll continue to work with some of the other states and you'll probably see us do something else with a couple of the other states this year.

And Paul, I would just add this program, as Rusty indicated, we're very excited about This program, when it works as designed, and it will because it really is just math and time, moves the financial liability for plugging our West Virginia Wells off of our balance sheet and away from future cash flows of this business. It is a significant victory for our company.

Understood. Appreciate the clarity over the text. Thank you, Paul.

Thank you. Our next question has come from the line of Sam Wahab with Peel Hunt. Please proceed with your questions.

Hi there. Hi, everyone. Congrats on another great set of results. A lot of my questions have been answered, but one that still stands out is sort of linked with the Sheridan transaction and the strategic partnership with Carlisle. I noticed, obviously, the Sheridan deal is very much gas-weighted compared to Maverick last year, where you introduced a lot more liquids. I mean, is that a signal of intent in terms of strategy? You talked earlier about data center demands, LNG opportunities. Would that partnership be more gas-weighted going forward? And what does the landscape look like for opportunities? And is gas at the moment a better deal than potentially oil, given the uptick in prices?

Yeah, good question. We are, you know, I've said this before, we're not really focused on whether it's liquids or gas. What we're focused on is the value that we can get from the acquisition. In this case, it was mostly gas, obviously, but it was sitting right in our geographical operating area and just gave us all kinds of opportunities to drive the costs down, increase them. We bought it on a margin. We think we can increase that margin. And so that's what made it so attractive to us. um you know the carlisle partnership they're they're they don't really care whether it's uh liquids or natural gas either and so um but they do have a size you know they obviously want to do deals a little larger than this one uh and so uh that's primarily the reason why we just did this one on our own uh through our own liquidity uh but you know they they're they don't have a preference You know, whether it's liquids or natural gas, we're all about where can we get the best return. That's what we're focused on. And whether it's liquids, whether it's natural gas, it doesn't matter to us.

That's clear. Thank you.

Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Rusty Hudson for closing comments.

Thank you all for attending today. Obviously, if any other questions or have any additional information that you need, please reach out to Doug in his numbers in the press release for you to reach out. Thank you all and have a great day.

Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. May disconnect your lines at this time and enjoy the rest of your day.