Diversified Energy announces strategic acquisition and revised capital framework
DEC
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BIRMINGHAM, AL – Diversified Energy Company PLC (LSE:DEC);(NYSE:DEC) has reported significant financial results for the year ending December 31, 2023, and announced a conditional agreement with Oaktree Capital Management for the acquisition of working interests in the Central Region. This move is part of a revised capital allocation framework aimed at strengthening the balance sheet and ensuring sustainable shareholder returns.
The company recorded a net daily production average of 821 MMcfepd, with a December exit rate of 775 MMcfepd. The year-end reserves stood at 3.8 Tcfe, with a net income of $760 million, which included $688 million from non-cash unsettled derivative fair value adjustments. Adjusted EBITDA was $543 million, leading to free cash flow of $219 million.
Total revenue, inclusive of hedges, grew to $1 billion, and year-end liquidity was reported at $139 million. The leverage ratio was at 2.3x. Diversified also commenced trading on the New York Stock Exchange and recommended a final quarterly dividend of $0.29 per share.
On the sustainability front, the company achieved its 2030 Scope 1 methane intensity goal seven years early, reducing methane intensity by 33%. It was awarded the Gold Standard for emissions reporting by OGMP 2.0 for the second consecutive year and increased its MSCI sustainability rating to AA.
The acquisition from Oaktree will add approximately 510 Bcfe of PDP reserves, with an estimated gross purchase price of $410 million. The transaction is expected to provide a 15% increase in overall company production and generate robust cash flow with a 2024 Adjusted EBITDA of $126 million. The acquisition is subject to shareholder approval and regulatory approvals, with completion expected in the second quarter of 2024.
The company plans to focus on optimized cash flow generation, cost structure optimization, and financial and operational flexibility, alongside sustainability innovation and scale through accretive growth.
This article is based on a press release statement from Diversified Energy Company PLC.
InvestingPro Insights
Diversified Energy Company PLC’s (NYSE:DEC) recent financial results and strategic acquisition signal a commitment to sustainable growth and shareholder returns. In light of these developments, certain metrics and InvestingPro Tips can provide additional context for investors evaluating the company’s performance and prospects.
InvestingPro Data reveals a market capitalization of $514.99M, reflecting the company’s current market valuation. The Price to Earnings (P/E) ratio stands attractively at 0.5, suggesting that the company’s shares might be undervalued compared to its earnings. Moreover, the robust Dividend Yield of 20.78% as of the last recorded date indicates that Diversified Energy is significantly rewarding its shareholders through dividends, which aligns with the company’s announcement of a final quarterly dividend of $0.29 per share.
InvestingPro Tips highlight that Diversified Energy has raised its dividend for 7 consecutive years, demonstrating a reliable track record of returning value to shareholders. Additionally, analysts forecast that the company will be profitable this year, which is consistent with the company’s reported net income and optimistic acquisition outlook.
For investors seeking a deeper analysis and more InvestingPro Tips on Diversified Energy Company PLC, including operational and financial nuances, they can explore further at https://www.investing.com/pro/DEC. There are 11 additional tips listed in InvestingPro that can guide investment decisions. To access these insights with an extra benefit, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
