Diversified Energy Reiterates 2026 Outlook Ahead of Birch Close

The Tip Desk · November 11, 2026 · 3 min read

Adjusted EBITDA was $256 million in the third quarter as commodity revenue fell to $470 million and a $348 million non-cash derivatives loss produced a $202 million net loss.

Diversified Energy Company (DEC) reported a $202 million net loss for the three months ended September 30, 2026, including a $348 million loss on non-cash unsettled derivatives, after a $248 million net income in the prior quarter.

The publicly traded energy company said average production declined to 1,189 MMcfepd (198 Mboepd) from 1,253 MMcfepd (209 Mboepd) in the second quarter. Total commodity revenue fell to $470 million from $504 million. Adjusted EBITDA was $256 million. Operating cash flow increased to $136 million from $89 million. Adjusted free cash flow was $153 million. Capital expenditures were $39 million.

Production mix was about 72% natural gas, 14% oil and 14% NGLs. Per-unit revenue excluding Next Level Energy was $4.36/Mcfe ($26.16/Boe), down from $4.82/Mcfe ($28.92/Boe) a year earlier, as proceeds from divestitures fell to $0.22/Mcfe from $0.71/Mcfe. Average realized price was $4.02/Mcfe ($24.12/Boe). Adjusted EBITDA margin compressed to 56% from 66% a year earlier.

The company said midstream and transportation expenses decreased versus prior-period levels, with transportation expense at $0.22/Mcfe versus $0.26/Mcfe a year earlier. It said per-unit expenses are anticipated to improve as it continues to implement its playbook for long-term synergies and cost savings.

Year-to-date acreage-sale value reached approximately $149 million. Shareholder returns through November 4 were approximately $157 million, including $94 million in share repurchases and about $63 million from its fixed dividend, which the company said represented an approximate 17% shareholder return yield. In the third quarter through November 4, it repurchased 698,502 shares, about 1% of shares outstanding. Year-to-date repurchases totaled 6,676,753 shares, about 9% of shares outstanding. A $0.29-a-share dividend was declared for the third quarter.

The company said third quarter marked the initial quarter of cash flows from its 40% ownership in the special purpose vehicle for producing assets acquired in the Camino acquisition with Carlyle, totaling approximately $8.6 million, including about $6.6 million from residual operating cash flow and about $2.0 million in management fees. It had completed drilling of the first four wells in its 20 gross well Oklahoma development program, with completion activities underway and operations on schedule.

Liquidity of credit facility availability and unrestricted cash was $506 million as of September 30, down from $678 million as of June 30. The leverage ratio rose to 2.66x from 2.45x. Consolidated debt consisted of about 72% in deleveraging non-recourse ABS and amortizing notes. The company retired $313 million, or approximately 11%, in outstanding debt under certain ABS notes in 2026. It said it received approval from its bank group to upsize its credit facility from $900 million to $1 billion subsequent to the end of the third quarter.

Diversified is reiterating previously announced full-year 2026 guidance of 1,180 to 1,210 MMcfepd, $960 million to $1,010 million of adjusted EBITDA and about $440 million of adjusted free cash flow. The guidance includes an estimate of about $150 million of cash proceeds for full-year 2026 portfolio optimization and is based on July 2026 strip prices. The Birch acquisition is not included in the guidance and remains on track to close during the fourth quarter.

The company said the accretive acquisition of Birch Resources is on schedule for an expected fourth-quarter closing, creating a top-15 U.S. publicly listed independent oil and gas company based on production, including a scaled, vertically integrated position in the Permian Basin. The portion of Birch production related to the ABS financing has been hedged prior to closing. Chief executive Rusty Hutson, Jr. said the deal, pro forma, would provide an estimated 55% increase in adjusted EBITDA and an increase of over 100% in adjusted free cash flow, and would broaden the commodity mix and operating presence in the Permian Basin.