Diversified Energy Reports Record Year, Highlighted by Transformative Year-over-Year Growth, Strong Cash Generation, and Integration of ~$2 Billion in Acquisitions with Meaningful Synergies

26 Feb 2026 22:17 CET

Diversified Energy Reports Record Year, Highlighted by Transformative
Year-over-Year Growth, Strong Cash Generation, and Integration of ~$2 Billion in
Acquisitions with Meaningful Synergies
Significant Revenue Growth Delivers Higher than Expected Full-Year Net-Income
and Adjusted EBITDA that Beat Guidance
23% Annualized Improvement in Leverage Ratio, While Also Returning Over $185
Million to Shareholders Through Dividends and Strategic Share Repurchases
2026 Guidance Reflects Confidence in the Business's Stability and Cash
Generation Through Commodity Cycles
Celebrating Our 25th Anniversary Year with the Completion of our Milestone of
Primary Listing on the NYSE, US Incorporation, and Filing of Full Year GAAP
Financials
Diversified Energy Company ("Diversified", "DEC", or the "Company") (NYSE: DEC,
LSE: DEC) is pleased to announce its financial and operational results for the
fourth quarter and full-year ended December 31, 2025, reporting performance that
exceed expectations and key strategic and financial achievements.
Delivering Reliable Results and Strategic Growth
Fourth Quarter 2025 Results
• Production exit rate(a): 1,254 MMcfepd (209 Mboepd)
• Average production: 1,198 MMcfepd (200 Mboepd)
• Total Revenue: $667 million
• Net Income: $196 million
• Adjusted EBITDA(b): $254 million
• Operating Cash Flow: $182 million
• Adjusted Free Cash Flow(c): $152 million after $7 million of transaction costs


Full Year 2025 Results
• Average production: 1,086 MMcfepd (181 Mboepd)
• Total Revenue: $1,829 million
• Net Income: $342 million
• Adjusted EBITDA(b): $956 million
• Operating Cash Flow: $465 million
• Adjusted Free Cash Flow(c): $440 million after $55 million of transaction
costs
• Capital Expenditures: $185 million

Financial and Operational Metrics
4Q25 4Q24 YoY
% Change FY25 FY24 YoY
% Change
Production (Mmcfe/d) 1,198 843 42% 1,086 791 37%
Production volume mix
Natural gas 72% 85% 75% 84%
NGLs 14% 12% 13% 12%
Oil 14% 3% 12% 4%
Total Revenue (millions) $667 $59 1,031% $1,829 $757 142%
Net Income (millions) $196 $(106) 285% $342 $(103) 432%
Adj. EBITDA(b) (millions) $254 $139 83% $956 $470 103%
Adj. Free Cash Flow(c) (millions) $152 $53 187% $440 $210 110%
Financial Strength and Shareholder Returns
• Current Liquidity(d): $577 million of credit facility availability and
unrestricted cash
• ABS principal reduction: Retired $277 million in principal amount outstanding
under certain ABS facilities during 2025
• Leverage ratio(e): 2.3x as of YE2025; ~23% improvement from YE2024
o Consolidated debt consists of ~73% in non-recourse ABS securities
• Shareholder returns: Over $185 million returned via dividends and
repurchases(f)
o Shareholder return yield(f) of ~18%
o ~7.3 million shares repurchased (~10% of outstanding shares), totaling ~$100
million(f)
o New Board authorized share repurchase program for up to 7,800,000 shares (~10%
of shares outstanding)
• 4Q25 dividend: $0.29 per share declared
Strategic Execution and Transformational Growth
~$2B of Transformational Acquisitions - Maverick Natural Resources & Canvas
Energy: Enhances Diversified’s stature as a leading consolidator of established
cash-generating energy assets
• Positions Diversified as a differentiated business, offering ~$1.2 billion of
Pro-Forma Adjusted EBITDA(g), over 1.2 Bcfepd of low decline production,
multi-basin commodity diversification, and a strong hedging program that
promotes consistent free cash flows
• Acquisitions helped deliver over 100% growth in Adjusted EBITDA and Adjusted
Free Cash Flow
• Integration playbook from 30+ acquisitions and counting allowed for upsized
synergy capture of over $60 million on Maverick Natural Resources and over $20
million on Canvas Energy
Carlyle Partnership Continues to Bolster Growth Prospects
• Strategic partnership to invest up to $2 billion in existing U.S. proved
developed producing (PDP) oil and gas assets strengthens outlook and conviction
on ability to close accretive transactions, while preserving capital flexibility
and liquidity
• Canvas Energy marked the inaugural transaction and funding from the Carlyle
strategic partnership
Non-Op Platform Provides Additional Lever for Value Generation
• New Permian Basin joint development program with a private operator in the
Northwest Shelf adds additional optionality to Non-Op platform
• Permian partnership included upfront proceeds to DEC for land and working
interests, and well-by-well election supporting capital flexibility
• Oklahoma Joint Development Partnership continues to produce and estimated over
60% IRRs with 114 wells drilled under the JDA in the last 3 years
• Adding incremental production that offsets an estimated ~50% of natural
decline (2026 estimated avg. ~10,800 BOEpd) annually across two partnerships
• Superior capital intensity of less than 15% ($140 million capital spend(h))
for Non-Op Partnerships
Unlocking Value Through Portfolio Optimization
• Our Portfolio Optimization Program ("POP") realized ~$160 million from
non-core asset and leasehold divestitures
• Our POP highlights optionality in DEC’s portfolio to monetize our vast acreage
position via Non-Op Partnerships or leasehold divestitures
• Generated ~$9 million of cash flow from environmental credits related to Coal
Mine Methane (CMM) in 2025
Mountain State Plugging Fund & Next LVL Energy
• Groundbreaking partnership to establish the nation’s FIRST financial assurance
fund dedicated to retirement of DEC owned wells (~21,000) in the state of West
Virginia; represents ~25% of total gross well count
• Added additional capacity in Appalachia through purchase of CSR Services that
increases Next LVL to a total of ~25 pole rigs
• Permanently retired 484 wells, including 386 Diversified wells
• Since establishment of Next Level in 2022, Diversified has retired ~1,400
wells
Rusty Hutson, Jr., CEO of Diversified, commented:
“I am grateful to our Diversified employees who delivered an incredible 2025
performance and, measured by most metrics, produced the best operational and
financial results in our history. We are pleased to report that these results
exceeded the upwardly revised guidance range for Adjusted EBITDA and Adjusted
Free Cash Flow, demonstrating once again our culture of execution and
accountability. Importantly, with the robust cash flow generated from our
assets, we reinforced our proven performance with $277 million in systematic
debt reduction, $185 million in combined dividends and share repurchases, and
approximately $2 billion in accretive acquisitions for the year.
Our 2026 guidance reflects continued disciplined growth, portfolio optimization,
and strong free cash flow generation as we look to unlock additional shareholder
value from our high-quality assets. I am very excited about the future of
Diversified. Both our team and our portfolio of assets are aligned with powerful
megatrends: power generation, data centers, and LNG export. Our unique business
model, underpinned by our organizational culture of focused execution to GSD
(Get Stuff Done), will enable us to capitalize on these trends and drive
long-term shareholder value.
For 25 years we have been in the business of stepping up when others step away.
As we celebrate this milestone anniversary, our core beliefs and values upon
which the company was founded have not wavered. We have pioneered a strategy of
acquiring, operating, and optimizing established energy assets that has allowed
us to transform one company's divestiture into our consistent cash flow. Today,
we are the single largest operator of established producing wells in the United
States, a responsibility we take very seriously, and we maintain a track record
of delivering innovation, operational excellence, and results every day.
We were the underdogs, but now we are proven, and we are just getting started."
Operations and Finance Update
Fourth Quarter Production
The Company recorded exit rate production as of December 31, 2025 of 1,254
MMcfepd (209 Mboepd)(a) and delivered 4Q25 average daily production of 1,198
MMcfepd (200 Mboepd). The Company's production volume mix was approximately 72%
natural gas, 14% natural gas liquids ("NGL's"), and 14% oil, with approximately
65% of production volumes from the Central region and 35% from Appalachia for
the fourth quarter. Production for the quarter continued to benefit from
Diversified’s peer-leading, shallow decline profile.
2025 Production
The Company recorded average daily production of 1,086 MMcfepd (181 Mboepd). The
Company's production volume mix was approximately 75% natural gas, 13% natural
gas liquids ("NGL's"), and 12% oil.
Fourth Quarter Margin and Total Cash Expenses per Unit
Diversified delivered 4Q25 per unit revenues of $4.35/Mcfe(i) ($26.10/Boe) and
Adjusted EBITDA Margin(b) of 55%. Notably, these per unit metrics reflect an
increase in both revenues and expenses from the incorporation of greater liquids
production following the Maverick Natural Resources acquisition. The Company’s
per unit expenses are anticipated to improve as the Company implements its
playbook to achieve long-term, sustainable synergies and cost savings. For
example, General and Administrative expenses decreased during 4Q25 compared to
prior period levels, despite the higher per unit costs of Maverick, supporting
our progress on cost savings and synergy capture.
2025 Margin and Total Cash Expenses per Unit
Diversified delivered 4Q25 per unit revenues of $4.49/Mcfe(i) ($26.94/Boe) and
Adjusted EBITDA Margin(b) of 58%.
4Q25 4Q24 FY25 FY24
$/Mcfe $/Boe $/Mcfe $/Boe $/Mcfe $/Boe $/Mcfe $/Boe
Average realized
price(1) $ 4.08 $ 24.48 $ 3.16 $ 18.96 $ 3.94 $ 23.64 $ 3.05 $ 18.30
Other revenue(2) 0.12 0.72 0.14 0.84 0.15 0.90 0.16 0.96
Proceeds from
divestitures(3) 0.15 0.90 0.29 1.74 0.40 2.40 0.14 0.84
Total revenue and proceeds from divestitures, excluding Next Level
Energy(4) $ 4.35 $ 26.10 $ 3.59 $ 21.54 $ 4.49 $ 26.94 $ 3.35 $ 20.10

Lease operating
expense(5) $ 1.12 $ 6.72 $ 0.83 $ 4.98 $ 1.12 $ 6.72 $ 0.73 $ 4.38
Production taxes 0.21 1.26 0.11 0.66 0.22 1.32 0.12 0.72
Midstream operating
expense 0.18 1.08 0.23 1.38 0.20 1.20 0.25 1.50
Transportation expense 0.22 1.32 0.31 1.86 0.29 1.74 0.31 1.86
Total operating
expense(6) $ 1.73 $ 10.38 $ 1.48 $ 8.88 $ 1.83 $ 10.98 $ 1.41 $ 8.46
Employees, administrative costs and professional
fees(7) 0.29 1.74 0.32 1.92 0.26 1.56 0.30 1.80
Adjusted Operating Cost per
Unit(8) $ 2.02 $ 12.12 $ 1.80 $ 10.80 $ 2.09 $ 12.54 $ 1.71 $ 10.26
Adjusted EBITDA Margin(9) 55 % 53 % 58 % 50 %
(1) Total commodity revenue, including settled derivatives.
(2) Total midstream and other revenue, excluding Next Level Energy revenue.
(3) Proceeds from divestitures represents cash proceeds related to asset
optimization
(4) Total revenue and proceeds from divestitures related to asset optimization,
excluding Next Level Energy revenue.
(5) Total lease operating expense, excluding Next Level Energy lease operating
expense.
(6) Total operating expense, excluding Next Level Energy lease operating
expense.
(7) Total employees, administrative costs, and professional fees, excluding Next
Level Energy. These costs include payroll and benefits for our administrative
and corporate staff, costs of maintaining administrative and corporate offices,
costs of managing our production operations, franchise taxes, public company
costs, fees for audit and other professional services, and legal compliance.
(8) Adjusted Operating Cost per Unit excludes lease operating expense and
employees, administrative costs and professional fees attributable to Next Level
Energy.
(9) Adjusted EBITDA Margin represents adjusted EBITDA, as a percentage of total
revenue, excluding (gain) loss on fair value adjustments of unsettled
derivatives.
Share Repurchase Program
For the fiscal year 2025 and year-to-date 2026, the Company has repurchased
8,320,400(j) shares, representing approximately 11% of the shares outstanding.
The Board of Directors has approved a new share repurchase program authorizing
the Company to repurchase up to 7,800,000 shares (~10% of the shares
outstanding, including shares held by the Employee Benefit Trust "EBT"). The
board believes this new authorization provides the Company ample opportunity to
strategically repurchase shares. This new authorization replaces the previously
announced share repurchase plan and authorizes the repurchase of our shares
through March 1, 2027.
Repurchases of shares under the program may be made, from time to time, in
privately negotiated transactions, in open market transactions, or by other
means, including through trading plans intended to qualify under Rule 10b-18
and/or Rule 10b5-1 of the U.S. Securities Exchange Act of 1934, as amended. The
amount and timing of any repurchases made under the program will be in the
Company’s sole discretion and will depend on a variety of factors, including
legal requirements, market conditions, other investment opportunities, available
liquidity, and the prevailing market price of the common shares. The program
does not obligate the Company to repurchase any dollar amount or number of
shares, and the program may be suspended or discontinued at any time at the
Company’s discretion.


2026 Outlook
The Company is presenting its Full Year 2026 guidance. Following the recently
completed acquisitions Diversified expects to realize continued significant
operational synergies associated with a larger, consolidated position in
Oklahoma, additional cash generation from its portfolio optimization program,
and the ability to continue to improve the overall cost structure of its
established producing assets while continuing to prioritize returns and Free
Cash Flow generation.
2026 Guidance(1)
Total Production (Mmcfe/d) 1,170 to 1,210
% Liquids ~28%
% Natural Gas ~72%
Total Capital Expenditures (millions)
Non-Op JV Partnership $135 to $155
Maintenance/Other $70 to $80
Adj. EBITDA(b) (millions) $925 to $975
Adj. Free Cash Flow(c) (millions) ~$430
Leverage Target 2.0x to 2.5x
(1) Includes the value of anticipated cash proceeds for 2026 asset optimization
of ~$100 million; based on January 2026 strip prices. Excludes changes in cash
from working capital. Does not incorporate recently announced Sheridan
Production acquisition. The Company includes Adjusted EBITDA and Adjusted Free
Cash Flow in the Company’s Full Year 2026 Outlook. Adjusted EBITDA and Adjusted
Free Cash Flow are non-GAAP financial measures and have not been reconciled to
the most comparable GAAP financial measures because it is not possible to do so
without unreasonable efforts due to the uncertainty and potential variability of
reconciling items, which are dependent on future events and often outside of
management’s control and which could be significant. Because such items cannot
be reasonably predicted with the level of precision required, we are unable to
provide an outlook for the comparable GAAP measures.

Conference Call Details
The Company will host a conference call Friday, February 27, 2026, at 8:30 AM ET
to discuss the full year 2025 results and will make an audio replay of the event
available shortly thereafter.
US (toll-free) +1 877-836-0271/+1 201-689-7805
UK (toll-free) +44 (0)800 756 3429
Web Audio https://www.div.energy/news-events/ir-calendarevents
Replay Information https://ir.div.energy/financial-info

Footnotes:
(a) Exit rate includes full month of December 2025 production.
(b) Adjusted EBITDA represents earnings before interest, taxes, depletion, and
amortization, and includes adjustments for items that are not comparable
period-over-period; Adjusted EBITDA Margin represents Adjusted EBITDA as a
percent of Total Revenue, Inclusive of Hedges settled in cash; For more
information, please refer to the Non-GAAP reconciliations as set out below.
(c) Adjusted Free Cash Flow represents net cash provided by operating
activities less expenditures on natural gas and oil properties and equipment,
and includes proceeds from divestitures related to asset optimization; For more
information, please refer to the Non-GAAP reconciliations as set out below.
(d) Liquidity as of February 25, 2026, including impact of $200M Nordic bond
tap.
(e) “leverage” or “leverage ratio,” is measured as net debt divided by pro
forma adjusted EBITDA for the twelve months ended December 31, 2025.
Reconciliation table is provided in the appendix of this release.
(f) Includes the total value of dividends paid and declared, and share
repurchases (including by the Employee Benefit Trust) through December 31, 2025.
Shareholder Return Yield is calculated using total value of dividends paid and
declared, and share repurchases (including by the Employee Benefit Trust)
through December 31, 2025 over market cap as of December 31, 2025
(g) Includes adjustments for the three months ended December 31, 2025 for the
Canvas acquisition to pro forma results. Similar adjustments were made for the
three months ended December 31, 2024 for the East Texas II acquisition as well
as for the twelve months ended December 31, 2025 for the Canvas, Maverick,
Summit, and Williams acquisitions.
(h) Capital Intensity defined as capital expenditures on non-operated drilling
programs over adjusted EBITDA
(i) Includes the impact of derivatives settled in cash and proceeds from
divestitures related to asset optimization. For purposes of comparability,
excludes Other Revenue of $2 million in 4Q25, $5 million in 4Q24, $12 million in
2025, and $16 million in 2024, and Lease Operating Expense of $4 million in
4Q25, $5 million in 4Q24, $15 million in 2025, and $19 million in 2024
associated with Diversified’s wholly owned plugging subsidiary, Next LVL Energy.

(j) Includes total share repurchases (including by the Employee Benefit Trust)
from January 1, 2025 through February 26, 2026.
For Company-specific items, refer also to the Glossary of Terms and/or
Alternative Performance Measures found in the Company’s Annual Report and Form
10-K for the year ended December 31, 2025 filed with the United States
Securities and Exchange Commission and available on the Company’s website.
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) concerning the financial
condition, results of operations, business and outlook of the Company and its
wholly owned subsidiaries. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements. These
forward-looking statements, which contain the words “anticipate”, “believe”,
“intend”, “estimate”, “expect”, “may”, “will”, “seek”, “continue”, “aim”,
“target”, “projected”, “plan”, “goal”, “achieve”, “guidance”, "outlook" 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. 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, such as general economic and business conditions, the
behavior of other market participants, industry trends, competition, commodity
prices, changes in regulation, currency fluctuations, our ability to recover our
reserves, our ability to successfully integrate acquisitions, our ability to
obtain financing to meet liquidity needs, changes in our business strategy,
political and economic uncertainty. The list above is not exhaustive and there
are other factors that may cause the Company’s actual results to differ
materially from the forward-looking statements contained in this announcement,
Including the risk factors described in the “Risk Factors” section in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed
with the United States Securities and Exchange Commission.
Forward-looking statements speak only as of their date and neither the Company
nor any of its respective 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. In light of these risks,
uncertainties and assumptions, the events described in the forward-looking
statements in this announcement, may not occur. As a result, you are cautioned
not to place undue reliance on such forward-looking statements. Past performance
of the Company cannot be relied on as a guide to future performance. No
statement in this announcement is intended as a profit forecast or a profit
estimate and no statement in this announcement should be interpreted to mean
that the financial performance of the Company for the current or future
financial years would necessarily match or exceed the historical published for
the Company.
Use of Non-GAAP Measures
Certain key operating metrics that are not defined under GAAP ("non-GAAP"
measures) are included in this announcement. These non-GAAP measures are used by
us to monitor the underlying business performance of the Company from period to
period and to facilitate comparison with our peers. Since not all companies
calculate these or other non-GAAP metrics in the same way, the manner in which
we have chosen to calculate the non-GAAP metrics presented herein may not be
compatible with similarly defined terms used by other companies. The non-GAAP
metrics should not be considered in isolation of, or viewed as substitutes for,
the financial information prepared in accordance with GAAP. Certain of the key
operating metrics are based on information derived from our regularly maintained
records and accounting and operating systems.
Adjusted EBITDA & Pro Forma 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, finance costs, accretion of asset
retirement obligation, other (income) expense, (gain) loss on fair value
adjustments of unsettled financial instruments, (gain) loss on natural gas and
oil property and equipment, (gain) loss on sale of equity interest, unrealized
(gain) loss on investment, costs associated with acquisitions, other adjusting
costs, loss on early retirement of debt, non-cash equity compensation, (gain)
loss on interest rate swaps, and items of a similar nature.
Adjusted EBITDA and pro form 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 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. When evaluating this measure, we believe
investors also commonly find it useful to evaluate this metric as a percentage
of our total revenue, inclusive of settled hedges, producing what we refer to as
our adjusted EBITDA margin.
The following table presents a reconciliation of the GAAP financial measure of
net income (loss) to the non-GAAP measure of adjusted EBITDA for each of the
periods listed:
Three Months Ended Twelve Months Ended
(in thousands) December 31, 2025 December 31, 2024 December 31, 2025 December
31, 2024
Net income (loss) $ 195,552 $ (106,193) $ 341,899 $ (103,093)
Interest expense 55,082 37,167 209,967 136,801
Accretion of asset retirement obligations 19,182 7,805 48,607 28,464
Other (income) expense(1) (993) (2,009) (1,977) (1,257)
Income tax (benefit) expense 1,471 (128,932) (40,550) (144,845)
Depreciation, depletion and amortization 154,076 95,511 412,506 291,995
(Gain) loss on fair value adjustments of unsettled
derivatives (201,964) 202,124 (193,843) 189,030
(Gain) loss on natural gas and oil properties and
equipment(2) 21,273 16,689 86,730 14,917
Costs associated with acquisitions 3,629 4,532 35,724 11,573
Other adjusting costs(3) 3,636 7,644 19,424 22,375
Loss on early retirement of debt — 2,469 26,971 16,377
Non-cash stock-based compensation 3,037 2,258 10,398 8,286
(Gain) loss on interest rate swaps (30) (41) (135) (190)
Total adjustments $ 58,399 $ 245,217 $ 613,822 $ 573,526
Adjusted EBITDA $ 253,951 $ 139,024 $ 955,721 $ 470,433
Pro forma adjusted EBITDA(4) $ 281,558 $ 140,431 $ 1,211,214 $ 546,694
1. Excludes $0.2 million, $0.4 million, $1.3 million, and $1.1 million in
dividend distributions received for our investment in DP Lion Equity Holdco
during the three months ended December 31, 2025 and 2024, and the twelve months
ended December 31, 2025 and 2024,respectively.
2. Includes $16 million, $23 million, $160 million, and $41 million in cash
proceeds received for leasehold sales during the three months ended December 31,
2025 and 2024, and the twelve months ended December 31, 2025 and 2024,
respectively.
3. Other adjusting costs for the three and twelve months ended December 31, 2025
were primarily associated with one-time personnel-related expenses and legal
fees from certain litigation. Other adjusting costs for the three and twelve
months ended December 31, 2024 were primarily associated with legal and
professional fees.
4. Includes adjustments for the three months ended December 31, 2025 for the
Canvas acquisition to pro forma results. Similar adjustments were made for the
three months ended December 31, 2024 for the East Texas II acquisition as well
as for the twelve months ended December 31, 2025 for the Canvas, Maverick,
Summit, and Williams acquisitions and for the twelve months ended December 31,
2024 for the Oaktree, Crescent Pass, and East Texas II acquisitions.
Net Debt & Net Debt-to-Pro Forma Adjusted EBITDA
As used herein, net debt represents total debt as recognized on the balance
sheet less cash and restricted cash. Total debt includes our borrowings under
the Credit Facility, borrowings under or issuances of, as applicable, our
subsidiaries’ securitization facilities, and other borrowings. We believe net
debt is a useful indicator of our leverage and capital structure.
As used herein, net debt-to-pro forma adjusted EBITDA, or “leverage” or
“leverage ratio,” is measured as net debt divided by pro forma adjusted EBITDA.
We believe that this metric is a key measure of our financial liquidity and
flexibility and is used in the calculation of a key metric in one of our Credit
Facility financial covenants.
The following table presents a reconciliation of the GAAP financial measure of
total debt to the non-GAAP measure of net debt and a calculation of net
debt-to-pro forma adjusted EBITDA for each of the periods listed:
As of
(In thousands) December 31, 2025 December 31, 2024
Total debt(1) 2,952,014 1,704,931
LESS: Cash 29,697 5,990
LESS: Restricted cash(2) 115,413 46,269
Net debt $ 2,806,904 $ 1,652,672

Pro forma adjusted EBITDA(3) $ 1,211,214 $ 546,694
Net debt-to-pro forma adjusted EBITDA(4) 2.3x 3.0x
1. Includes adjustments for deferred financing costs and original issue
discounts, consistent with presentation on the statement of financial position.
2. The increase of restricted cash as of December 31, 2025, is due to the
addition of $21 million, $27 million, and $10 million in restricted cash for the
ABS X Notes, ABS Maverick Notes, and ABS XI Notes, respectively, offset by $4
million for the retirement of the ABS I & II Notes.
3. Includes adjustments to pro forma results for the twelve months ended
December 31, 2025 for the Canvas, Maverick, Summit, and Williams acquisitions
and for the twelve months ended December 31, 2024 for the Oaktree, Crescent
Pass, and East Texas II acquisitions.
4. Does not include adjustments for working capital which are often customary in
the market.
Free Cash Flow & Adjusted Free Cash Flow
As used herein, free cash flow represents net cash provided by operating
activities ("operating cash flow"), less expenditures on natural gas and oil
properties and equipment and adjusted free cash flow represents free cash flow
after adjusting for proceeds from divestitures related to asset optimization. We
believe that free cash flow and adjusted free cash flow are useful indicators of
our ability to generate cash that is available for activities beyond capital
expenditures. We believe that free cash flow and adjusted free cash flow provide
investors with an important perspective on the cash available to service debt
obligations, make strategic acquisitions and investments, and pay dividends.
The following table presents a reconciliation of the GAAP financial measure of
operating cash flow to the non-GAAP measure of free cash flow and adjusted free
cash flow for each of the periods listed:
Three Months Ended Twelve Months Ended
(in thousands) December 31, 2025 December 31, 2024 December 31, 2025 December
31, 2024
Operating cash flow $ 182,240 $ 45,304 $ 464,619 $ 220,650
LESS: Capital expenditures (47,100) (14,398) (184,600) (52,100)
Free cash flow $ 135,140 $ 30,906 $ 280,019 $ 168,550
ADD: Proceeds from divestitures 16,467 22,501 160,098 40,986
Adjusted FCF $ 151,607 $ 53,407 $ 440,117 $ 209,536
Total Revenue, Excluding (Gain) Loss on Fair Value Adjustments of Unsettled
Derivatives & Adjusted EBITDA Margin
As used herein, total revenue, excluding (gain) loss on fair value adjustments
of unsettled derivatives, represents total revenue less (gain) loss on fair
value adjustments of unsettled derivatives. We believe that total revenue,
excluding (gain) loss on fair value adjustments of unsettled derivatives, is
useful because it enables investors to discern our realized revenue after
adjusting for derivative settlements.
As used herein, adjusted EBITDA margin is measured as adjusted EBITDA, as a
percentage of total revenue, excluding (gain) loss on fair value adjustments of
unsettled derivatives. Adjusted EBITDA margin encompasses the direct operating
costs and the portion of general and administrative costs required to produce
each Mcfe. This metric includes operating expense, employee costs,
administrative costs and professional services, and recurring allowance for
credit losses, which cover both fixed and variable cost components. We believe
that adjusted EBITDA margin is a useful measure of our profitability and
efficiency, as well as our earnings quality, because it evaluates the Company on
a more comparable basis period-over-period, especially given our frequent
involvement in transactions that are not comparable between periods.
The following table presents a reconciliation of the GAAP financial measure of
total revenue to the non-GAAP measure of total revenue, excluding (gain) loss on
fair value adjustments of unsettled derivatives, and a calculation of adjusted
EBITDA margin for each of the periods listed:
Three Months Ended Year Ended
(in thousands) December 31, 2025 December 31, 2024 December 31, 2025 December
31, 2024
Total revenue $ 666,520 $ 58,578 $ 1,829,142 $ 757,290
(Gain) loss on fair value adjustments of unsettled
derivatives (201,964) 202,124 (193,843) 189,030
Total revenue, excluding (gain) loss on fair value adjustments of unsettled
derivatives $ 464,556 $ 260,702 1,635,299 946,320
Adjusted EBITDA $ 253,951 $ 139,024 $ 955,721 $ 470,433
Adjusted EBITDA margin 55 % 53 % 58 % 50 %

More information:
Access the news on Oslo Bors NewsWeb site

667031_2025 Earnings PR - Vf (3).pdf