Diversified to Acquire Complementary, High-Quality, Low-Decline Producing Assets

26 Feb 2026 22:15 CET

Diversified to Acquire Complementary, High-Quality, Low-Decline Producing Assets
Accretive Acquisition of Contiguous Operating Position
Diversified Energy Company (NYSE: DEC, LSE: DEC) ("Diversified" or the
"Company") is pleased to announce the execution of a purchase and sale agreement
for the acquisition of high-working interest, natural gas properties and related
facilities located in east Texas (the "Assets") from Sheridan Production (the
"Seller") (the "Acquisition").
The Acquisition is expected to be funded through existing liquidity from
Diversified’s senior secured bank facility. The Company expects to close the
Acquisition in the second quarter of 2026, subject to customary closing
conditions.
Acquisition Highlights
• Purchase price of $245 million in cash before anticipated, customary purchase
price adjustments
• Net purchase price represents estimated ~PV-15 valuation
• 2026 estimated net production of ~62 MMcfepd (~10 Mboepd)(a) with low annual
declines of ~6%(b)
o Complements Diversified’s industry-leading corporate declines and low capital
intensity
o Gas-weighted production with ~72% gas volumes
• Estimated NTM EBITDA of ~$52 million(c)
o PDP Reserves of ~397 Bcfe with estimated PV-10 of $310 million(b)
• Assets are contiguous with Diversified's existing East Texas assets
o Proximity to existing assets creates immediate line of sight to future
operating efficiencies
o Includes ~75,000 acres of commercially attractive leasehold in East Texas

Commenting on the Acquisition, CEO Rusty Hutson, Jr. said:
"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. The accretive transaction adds scale to our East Texas regional
footprint and remains consistent with our strategy to focus on acquiring
high-quality, low-decline producing assets at attractive valuations. These
assets will benefit from our Smarter Asset Management approach to improve
production, enhance margins, and grow free cash flow. Additionally, we
anticipate that incremental cash flow can be generated from our Portfolio
Optimization Programs. Our Company has a proven, demonstrated track record of
delivering value to shareholders from our strategy of acquiring, operating, and
optimizing established cash-generating energy assets."
Bolt-On Addition of Low-Decline PDP Assets
The Acquisition's estimated NTM EBITDA is approximately $52 million and reflects
attractive valuation of approximately PV-15. The Acquisition is expected to add
approximately 62 MMcfepd (~10 Mboepd) of production and approximately 397 Bcfe
reserves with a PV-10 of $310 million(b). Additionally, the production profile
of the Assets are highly complementary to the Company's existing portfolio and
operational strategy, with low annual production declines of ~6% per year that
would result in an unchanged consolidated decline rate, pro forma for the
Acquisition. The Assets include additional undeveloped acreage that presents
potential upside opportunities in line with Diversified's demonstrated ability
to unlock value on non-core assets and the Assets provide opportunities to
realize synergies attributable to Diversified’s operating scale and asset
density.
Footnotes:
a) Current production based on estimated average daily production for 2026;
Estimate based on historical performance and engineered type curves for the
Assets.
b) Estimated annual rate of production declines and PDP reserves values
(including volumes, PV-10 and approximate PV value) calculated using historical
production data, asset-specific type curves and an effective date of March 1,
2026 and based on the NYMEX strip at February 2, 2026, with terminal price
assumptions of $3.75/MMBtu and $65.00/Bbl for natural gas and oil, respectively.

c) Based on engineering reserves assumptions using historical cost assumptions
and NYMEX strip as of February 2, 2026 for the 12 month period ended March 1,
2027; does not include the impact of any projected or anticipated synergies that
may occur subsequent to acquisition.
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No. 596/2014 on Market Abuse (“UK MAR”), as it
forms part of the UK domestic law by virtue of the European Union (Withdrawal)
Act 2018.
For further information, please contact:
Diversified Energy Company +1 973 856 2757
Doug Kris dkris@dgoc.com

Senior Vice President
Investor Relations & Corporate Communications www.div.energy


FTI Consulting dec@fticonsulting.com

U.S. & UK Financial Public Relations
About Diversified Energy Company
Diversified is a leading publicly traded energy company focused on acquiring,
operating, and optimizing cash-generating energy assets. Through our unique
differentiated strategy, we acquire established assets and invest in them to
improve environmental and operational performance until retiring those assets in
a safe and environmentally secure manner. Recognized by ratings agencies and
organizations for our sustainability leadership, this solutions-oriented,
stewardship approach makes Diversified the Right Company at the Right Time to
responsibly produce energy, deliver reliable free cash flow, and generate
shareholder value.
Forward-Looking Statements
This announcement contains forward-looking statements (within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995). These forward-looking
statements, which contain the words "anticipate", "believe", "intend",
"estimate", "expect", "may", "will", "seek", "continue", "aim", "target",
"projected", "plan", "goal", "achieve", "opportunity" and words of similar
meaning, reflect the Company's beliefs and expectations and are based on
numerous assumptions regarding the Company's present and future business
strategies and the environment the Company will operate in and are subject to
risks and uncertainties that may cause actual results to differ materially. No
representation is made that any of these statements or forecasts will come to
pass or that any forecast results will be achieved. Expected benefits of the
Acquisition may not be realized and the Acquisition may not close on the terms
described in this release at all. Forward-looking statements involve inherent
known and unknown risks, uncertainties and contingencies because they relate to
events and depend on circumstances that may or may not occur in the future and
may cause the actual results, performance or achievements of the Company to be
materially different from those expressed or implied by such forward-looking
statements. Many of these risks and uncertainties relate to factors that are
beyond the Company's ability to control or estimate precisely, including the
risk factors described in the "Risk Factors" section in the Company's Annual
Report and Form 10K for the year ended December 31, 2025, filed with the United
States Securities and Exchange Commission. The pro forma financial information
in this announcement is for informational purposes only, is not a projection of
our future financial performance, and should not be considered indicative of
actual results should the Acquisition be consummated. Forward-looking statements
speak only as of their date and neither the Company nor any of its directors,
officers, employees, agents, affiliates or advisers expressly disclaim any
obligation to supplement, amend, update or revise any of the forward-looking
statements made herein, except where it would be required to do so under
applicable law. As a result, you are cautioned not to place undue reliance on
such forward-looking statements.
USE OF PROJECTIONS
This communication contains projections, including expected production volumes,
PV-10, EBITDA and decline rates. Our independent auditors have not audited,
reviewed, compiled, or performed any procedures with respect to the projections
for the purpose of their inclusion in this communication, and accordingly, have
not expressed an opinion or provided any other form of assurance with respect
thereto for the purpose of this communication. These projections are for
illustrative purposes only and should not be relied upon as being indicative of
future results. The assumptions and estimates underlying the projected
information are inherently uncertain and are subject to a wide variety of
significant business, economic and competitive risks and uncertainties that
could cause actual results to differ materially from those contained in the
projected information. Even if our assumptions and estimates are correct,
projections are inherently uncertain due to a number of factors outside our
control. Accordingly, there can be no assurance that the projected results are
indicative of our future performance after completion of the Acquisition or that
actual results will not differ materially from those presented in the projected
information. Inclusion of the projected information in this communication should
not be regarded as a representation by any person that the results contained in
the projected information will be achieved.
Adjusted EBITDA
As used herein, EBITDA represents earnings before interest, taxes, depletion,
depreciation and amortization. Adjusted EBITDA includes adjusting for items that
are not comparable period-over-period, namely, accretion of asset retirement
obligation, other (income) expense, loss on joint and working interest owners
receivable, (gain) loss on bargain purchases, (gain) loss on fair value
adjustments of unsettled financial instruments, (gain) loss on natural gas and
oil property and equipment, costs associated with acquisitions, other adjusting
costs, non-cash equity compensation, (gain) loss on foreign currency hedge, net
(gain) loss on interest rate swaps and items of a similar nature.
Adjusted EBITDA should not be considered in isolation or as a substitute for
operating profit or loss, net income or loss, or cash flows provided by
operating, investing, and financing activities. However, we believe such a
measure is useful to an investor in evaluating our financial performance because
it (1) is widely used by investors in the natural gas and oil industry as an
indicator of underlying business performance; (2) helps investors to more
meaningfully evaluate and compare the results of our operations from period to
period by removing the often-volatile revenue impact of changes in the fair
value of derivative instruments prior to settlement; (3) is used in the
calculation of a key metric in one of our Credit Facility financial covenants;
and (4) is used by us as a performance measure in determining executive
compensation. We are unable to provide a quantitative reconciliation of
forward-looking Adjusted EBITDA to the most directly comparable forward-looking
GAAP measure because the items necessary to estimate such forward-looking IFRS
measure are not accessible or estimable at this time without unreasonable
efforts. The reconciling items in future periods could be significant.
PV-10
PV-10 is a non-GAAP financial measure and generally differs from Standardized
Measure, the most directly comparable GAAP measure, because it does not include
the effects of income taxes on future net cash flows. While the Standardized
Measure is free cash dependent on the unique tax situation of each company,
PV-10 is based on a pricing methodology and discount factors that are consistent
for all companies. In this announcement, PV-10 is calculated using NYMEX
pricing. It is not practicable to reconcile PV-10 using NYMEX pricing to
standardized measure in accordance with GAAP at this time. Investors should be
cautioned that neither PV-10 nor the Standardized Measure represents an estimate
of the fair market value of proved reserves.

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