March 19, 2024 - 20-F: Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from to

Commission file number: 001-41870


	Diversified Energy Company PLC
	(Exact name of Registrant as specified in its charter)

	Not Applicable		England and Wales
	(Translation of Registrant’s name into English)		(Jurisdiction of incorporation or organization)

	1600 Corporate Drive Birmingham, Alabama 35242 Tel: +1 205 408 0909		Bradley G. Gray Diversified Energy Company PLC 1600 Corporate Drive Birmingham, Alabama 35242 Tel: +1 205 408 0909
	(Address of principal executive offices)		(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered, pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal (par) value £0.20 per share	DEC	New York Stock Exchange
Ordinary shares, nominal (par) value £0.20 per share	DEC	London Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period covered by the annual report: N/A

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act

of 1934. Yes ¨ No þ

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations

under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12

months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§

232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large

accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


¨ Large accelerated filer		¨ Accelerated filer		þ Non-accelerated filer		¨ Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

correction of an error to previously issued financial statements. ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


¨ U.S. GAAP		þ International Financial Reporting Standards as issued by the International Accounting Standards Board		¨ Other

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934

subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

2023

Annual Report

& FORM 20-F

Our Core Values

We CARE for each other, our communities, our industry

and our country!

COMMITMENT

—Seek opportunities for continuous learning

and improvement.

—Serve and support our teams and communities with

passion and enthusiasm.

ACCOUNTABILITY

—Act with personal and business integrity.

RESPECT

—Value the dignity and worth of all individuals.

—Respect environmental stewardship as we make

business decisions.

EXCELLENCE

—Commit to excellence in our performance.

—Exhibit courage of convictions, challenge the status quo

and strive to create value.


	Strategic Report
	8	Chairman’s and Chief Executive’s Statement
	10	A Differentiated Business Model
	12	Geographic Operating Areas
	14	Strategy
	19	Key Performance Indicators
	36	Sustainability Review
	73	Financial Review
	91	Risk Management Framework
	96	Risk Factors
	119	Viability and Going Concern

	Corporate Governance
	122	The Chairman’s Governance Statement
	128	Board of Directors
	133	Directors’ Report
	139	The Nomination & Governance Committee’s Report
	142	The Audit & Risk Committee’s Report
	148	The Remuneration Committee’s Report
	153	Remuneration at a Glance
	169	The Sustainability & Safety Committee’s Report

	Group Financial Statements
	172	Report of Independent Registered Public Accounting Firm
	175	Consolidated Statement of Comprehensive Income
	176	Consolidated Statement of Financial Position
	177	Consolidated Statement of Changes in Equity
	178	Consolidated Statement of Cash Flows
	179	Notes to the Group Financial Statements

	Additional Information (Unaudited)
	231	Payments to Governments Report 2023
	233	Alternative Performance Measures
	237	Officers and Professional Advisors
	238	Shareholder Information
	246	Glossary of Terms
	253	Signatures
	248	Exhibits

We have prepared our financial statements and the notes thereto in accordance with IFRS as issued by the International Accounting Standards Board.

To provide metrics that we believe enhance the comparability of our results to similar companies, throughout this Annual Report & Form 20-F, we refer

to Alternative Performance Measures (“APMs”). APMs are intended to be used in addition to, and not as an alternative for the financial information

contained within the Group Financial Statements, nor as a substitute for IFRS. Within the APMs section located in the Additional Information section

within this Annual Report & Form 20-F, we define, provide calculations and reconcile each APM to its nearest IFRS measure. These APMs include

“adjusted EBITDA,” “net debt,” “net debt-to-adjusted EBITDA,” “total revenue, inclusive of settled hedges,” “adjusted EBITDA margin,” “free cash flow,”

“adjusted operating cost per Mcfe,” “employees, administrative costs and professional services,” and “PV-10.”

Diversified Energy Company PLC (the “Parent” or “Company”) and its

wholly owned subsidiaries (the “Group,” “DEC,” or “Diversified”) is an

independent energy company engaged in the production,

transportation and marketing of primarily natural gas.

Our proven business model creates sustainable value in today's natural gas market by investing in

producing assets, reducing emissions and improving asset integrity while generating significant, hedge-

protected cash flows. We Acquire, Optimize, Produce and Transport natural gas, natural gas liquids and oil

from existing wells then Retire our wells at the end of their life to optimally steward the resource already

developed by others within our industry, reducing the environmental footprint, while sustaining important

jobs and tax revenues for many local communities. While most companies in our sector are built to explore

and develop new reserves, we fully exploit existing reserves through our focus on safely and efficiently

operating existing wells to maximize their productive lives and economic capabilities, which in turn

reduces the industry’s footprint on our planet.

Key Achievements


Accretive Growth Investment in the Tanos II Central Region acquisition totaled $262 million and bolstered average daily production by 8%.	Asset Monetization Unlocked value on non-core assets through the sale of undeveloped acreage and non-operated well interests for total consideration of $66 million.	U.S. Listing Commenced trading on the New York Stock Exchange under the “DEC” ticker in December 2023, expanding access to U.S. investors and improving trading liquidity.


Prioritizing Sustainability Realized 33% year-over-year reduction in Scope 1 methane intensity, achieving our 2030 goal of cumulative 50% reduction in Scope 1 methane intensity (from 2020 baseline) and driven largely by our focused and continual emissions detection, measurement and mitigation programs in both our Appalachia and Central regions.	Financing Executed the sale of certain producing assets in Appalachia to a special purpose vehicle “SPV”, generating proceeds of approximately $192 million through placement of an asset-backed securitization at the SPV, including the sale of an 80% equity interest in the SPV for $30 million.	Delivering Shareholder Value Share buybacks and distributed dividends represent $179 million in return of capital to shareholders.


2	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Cross Reference to Form 20-F


			Pages
Part I
Item 1.	Identity of Directors, Senior Management and Advisers		N/A
Item 2.	Offer Statistics and Expected Timetable		N/A
Item 3.	Key Information
	A.	[Reserved]
	B.	Capitalization and indebtedness	N/A
	C.	Reasons for the offer and use of proceeds	N/A
	D.	Risk factors	96-118
Item 4.	Information on the Group
	A.	History and development of the Group	1, 4, 12-13, 22, 179, 245
	B.	Business overview	23-35
	C.	Organizational structure	181, Exhibit 8.1
	D.	Property, plants and equipment	4, 12, 184, 201, 215, 237
Item 4A.	Unresolved Staff Comments		N/A
Item 5.	Operating and Financial Review and Prospects
	A.	Operating results	74-84
	B.	Liquidity and capital resources	84
	C.	Research and development, patents and licenses, etc.	N/A
	D.	Trend information	90
	E.	Critical accounting estimates	90
Item 6.	Directors, Senior Management and Employees
	A.	Directors and senior management	124, 128-132
	B.	Compensation	211, 213
	C.	Board practices	124, 125, 126, 134, 140-140, 143-143, 150-150, 171-171,
	D.	Employees	65
	E.	Share ownership	134, 211, 213
	F.	Disclosure of a registrant’s action to recover erroneously awarded compensation	N/A
Item 7.	Major Shareholders and Related Party Transactions
	A.	Major shareholders	134, 136
	B.	Related party transactions	226
	C.	Interests of experts and counsel	N/A
Item 8.	Financial Information
	A.	Consolidated Statements and Other Financial Information	172-227
	B.	Significant Changes	N/A
Item 9.	The Offer and Listing
	A.	Offer and listing details	179
	B.	Plan of distribution	N/A
	C.	Markets	179
	D.	Selling shareholders	N/A
	E.	Dilution	N/A
	F.	Expenses of the issue	N/A


2	Diversified Energy Company PLC Annual Report and Form 20-F 2023


			Pages
Item 10.	Additional Information
	A.	Share capital	N/A
	B.	Memorandum and articles of association	Exhibit 1.1 & 1.2
	C.	Material contracts	238-239
	D.	Exchange controls	240
	E.	Taxation	240-244
	F.	Dividends and paying agents	N/A
	G.	Statement by experts	N/A
	H.	Documents on display	245
	I.	Subsidiary information	N/A
	J.	Annual report to security holders	N/A
Item 11.	Quantitative and Qualitative Disclosures About Market Risk		90, 223-225
Item 12.	Description of Securities Other than Equity Securities
	A.	Debt securities	N/A
	B.	Warrants and rights	N/A
	C.	Other securities	N/A
	D.	American depositary shares	N/A
Part II
Item 13.	Defaults, Dividend Arrearages and Delinquencies		N/A
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		N/A
Item 15.	Controls and Procedures		245
Item 16.	[Reserved]		N/A
Item 16A.	Audit Committee Financial Expert		143
Item 16B.	Code of Ethics		135
Item 16C.	Principal Accountant Fees and Services		146, 195
Item 16D.	Exemptions from the Listing Standards for Audit Committees		N/A
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		N/A
Item 16F.	Change in Registrant’s Certifying Accountant		N/A
Item 16G.	Corporate Governance		N/A
Item 16H.	Mine Safety Disclosure		N/A
Item 16I.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		N/A
Item 16J.	Insider Trading Policies		N/A
Item 16K.	Cybersecurity		95
Part III
Item 17.	Financial Statements		N/A
Item 18.	Financial Statements		172-229
Item 19.	Exhibits		248


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	3

DEC at a Glance

Our Assets

Our assets primarily consist of long-life, low-decline natural gas wells and gathering systems located within the Appalachian

Basin and Central Region of the U.S., providing opportunistic synergies in our operations. Our headquarters are located in

Birmingham, Alabama with operational and field offices located throughout the states in which we operate.


4	Diversified Energy Company PLC Annual Report and Form 20-F 2023

KEY

l Upstream assets

l Midstream assets

l States in which we operate

APPALACHIA ASSETS

CENTRAL ASSETS

Key Facts



PRODUCTION MIX 86% natural gas 12% NGLs 2% oil	PRODUCTION 256,378 natural gas (MMcf) 5,832 NGLs (MBbls) 1,377 oil (MBbls)	PV-10 VALUE OF RESERVES $2.1 billion(a) 3,849,946 MMcfe	MIDSTREAM SYSTEM ~17,700 miles



SCOPE 1 METHANE EMISSIONS INTENSITY 0.8 MT CO2e/MMcfe	NO LEAK RATE ON SURVEYED WELLS ~98% Group-wide	AERIALLY SURVEYED MIDSTREAM MILES ~10,000 miles	REPORTABLE SPILL INTENSITY 0.08 oil & water per MBbl



NET INCOME $760 million	TOTAL REVENUE $868 million	ADJUSTED EBITDA MARGIN(b) 52%	ADJUSTED EBITDA(b) $543 million
(a)Based on SEC pricing. (b)Please refer to the APMs section in Additional Information within this Annual Report & Form 20-F for information on how these metrics are calculated and reconciled to IFRS measures.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	5

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6	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Strategic

Report


8	Chairman’s and Chief Executive’s Statement
10	A Differentiated Business Model
12	Geographic Operating Areas
14	Strategy
19	Key Performance Indicators
36	Sustainability
73	Financial Review
91	Risk Management Framework
96	Risk Factors
119	Viability and Going Concern


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	7

Chairman’s Statement


8	Diversified Energy Company PLC Annual Report and Form 20-F 2023


On behalf of the Board of Directors, I am pleased to share our financial and operational results that reflect the hard work, dedication, and focus of the entire Diversified team. Their consistent execution of our strategy and management initiatives has driven another year of strong environmental, financial, and operational performance. Throughout 2023, we continued to focus on cash flow generation, capital discipline, and balance sheet management. This, together with our resilient business model, means we have been able to deliver strong results which have benefited all stakeholders. In addition, we are proud of the part we are playing in responsibly providing the energy needed for our communities and country, as well as meeting growing demand beyond the U.S. Since 2017, Diversified’s demonstrated track record has delivered more than $800 million in returns to the Group’s stockholders including approximately $700 million in cash dividends paid and declared, along with approximately $110 million in share repurchases. The Board’s dedication to shareholder returns remains an absolute priority. We continuously refine the capital allocation framework in order to balance debt reduction, sustainable fixed dividends, strategic share repurchases and accretive acquisitions. We are proposing a final fourth quarter 2023 dividend of $0.29 which allows us to focus our cash flows on what we believe are the highest and best uses of capital. We are confident that this new level will be sustainable, and will also allow for continued debt reduction, more flexibility for alternative capital returns, and for funding future growth. We believe that our share price has been significantly undervalued for some while and has been affected by the structural de- equitization of the UK share market. We have, therefore, also authorized a share buyback program, which we believe will be an effective use of our capital and will further increase total shareholder returns. Part of our business model and strategy revolves around the continued addition of growth opportunities. We identified a listing on the New York Stock Exchange, in addition to the London listing, as an opportunity that could help to add significant value and were pleased to deliver on that key milestone this year. We view the NYSE listing as a great opportunity to expand access to U.S. investors and improve trading liquidity. We continue to evaluate opportunities to grow and to increasingly make Diversified the “Right Company at the Right Time.”		Another important part of our focused strategy is to create value through sustainability and stewardship. Over the past year, we have made significant progress with our methane emissions program, reducing emissions by over 33% from 2022 and achieving our 2030 goal meaningfully ahead of schedule. We are proud that we received recognition from the United Nations’ Oil & Gas Methane Partnership 2.0 (OGMP), being awarded the Gold rating for the second year. Our initiatives related to methane emission reductions are of paramount importance, and it gives us great confidence to see this recognized by international bodies. Operationally, we conducted over 246,000 leak detection surveys using industry-leading and proven detection equipment, and attaining a zero emissions rate of approximately 98%, proving the positive impact of our actions to eliminate methane leaks. Next LVL Energy, our asset retirement business, has continued to grow and contribute significantly to safe and efficient well retirements, retiring a total of 404 wells. This achievement included retiring a total of 222 Diversified wells in 2023, significantly exceeding state agreements. Additionally, our partnership with states on their orphan well programs resulted in 148 retired wells. We are immensely proud of the material investments we have made to lower our methane intensity, and to safely retire wells, and we remain focused on delivering continuous improvement. The Board and its Committees continue to operate effectively and are active in both supporting and challenging strategic discussions. There is an exceptional depth of knowledge and diversity of thinking. We again conducted a Board Performance Review during 2023 and will continue to ensure that we comply with all governance guidelines. As we look ahead to 2024 and beyond, I would like to recognize the quality of the team we have at Diversified, across the entire Group. I am very grateful for their work and look forward to future successes as a company in the years to come. In particular, I would like to thank the Executive Team, led by Rusty Hutson, Jr., who navigated the team through a year that has seen its share of broader challenges, notably an unfavorable commodity price environment. I also wish to express gratitude to our shareholders, lenders, and other stakeholders for their trust in our commitment to deliver long-term sustainable value and their support whilst we provide essential energy security and continue to care for our communities. David E. Johnson Chairman of the Board March 19, 2024

“

Together with our

resilient business

model, we have been

able to deliver strong

results which have

benefited all

stakeholders.

Chief Executive’s Statement


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	9


The fundamental need for natural gas is well- cemented in our domestic and global energy outlooks. Natural gas is the essential fuel to tackling global challenges – from enhancing energy security of the United States and allies around the world to addressing the universally shared need for reliable, affordable, and sustainable power, natural gas demand remains strong. It’s against this backdrop of rising global energy demand, consolidation in the U.S. energy markets, and enhanced expectations for sustainably produced energy that the case for Diversified’s stewardship business model sharpens. Thanks to our approach – focused on acquiring, improving, and retiring existing, long-life U.S. energy assets and honed through two decades of field experience – Diversified is the “Right Company at the Right Time” to responsibly manage existing domestic natural gas and oil production in a manner that’s consistent with environmental stewardship and a lower-carbon energy future. We continue to aggressively pursue this mission each and every day, and 2023 was no different. From closing the Tanos II acquisition – which increased our footprint in the Central Region and aligned with our stewardship and sustainability commitments – to ending the year with dual-listing on the New York Stock Exchange, 2023 was a year focused on execution against our core business objectives. Through our focused commitment to responsible asset management, we continue to drive methane intensities downward, while returning wells to production and gaining operational efficiencies. Compared to a 2020 baseline, upstream methane intensity has fallen over 50%, achieving our 2030 goal meaningfully ahead of schedule, and we are continuing to take aggressive steps to optimize environmental performance across our operating areas. By viewing asset retirement as a business opportunity, Diversified’s Next LVL Energy subsidiary is the largest well retirement company in Appalachia. Our focus on asset retirement stands out, with our dedicated teams responsibly retiring 404 wells in 2023 alone, as no other company is addressing state orphaned and end-of-life wells head-on like we are. This focus on sustainability principles has been validated on the domestic and global stage, with sustained Gold standard designations from the United Nation’s Oil and Gas Methane Partnership 2.0 (second year), attainment of the second- highest MSCI ESG “AA” rating, and multiple sustainability awards, to name a few. Last year’s sustainability report detailing our proactive approach took home the ESG Report of the Year by the international ESG Awards 2023 for speaking to “both head and heart,” while also receiving the top category nomination from IR Magazine. I am proud to see the hard work of our employees recognized as industry leaders time and again. We also continue to expand Diversified’s community-giving culture in the communities where we live and work, and we’re privileged to strengthen our corporate commitments to employees. We fully recognize none of this progress would be possible without our 1,600+ diligent team who work every day to ensure families across the United States have safe, clean, and reliable energy resources.		In the year ahead, we are taking a renewed focus on the values on which Diversified was founded: investing in strategic, aligned acquisitions that scale our model and deliver greater operational efficiencies, taking proactive steps to ensure the sustainability of assets, keeping costs low and de- leveraging the balance sheet – all while returning value to shareholders. Diversified has set in motion its “Focus Five” in order to demonstrate meaningful expansion of free cash flow generation while growing the company in a disciplined manner. That plan consists of the following core objectives: —Optimized cash flow generation —Cost structure optimization —Financial and operational flexibility —Sustainability innovation —Scale through accretive growth I believe these principles will help differentiate the Company among its peers in unlocking corporate value throughout 2024 and into the future. The Company has undertaken a reassessment of its capital allocation strategy to weigh the intrinsic value of the current share price level against the historical practice of returning capital through dividends. The Board and executive management team have jointly evaluated a number of potential scenarios to align the dividend level with expected future capital allocation needs, peer trends, current commodity prices and current equity market dynamics. The result of this assessment is the Board’s realignment of capital allocation and is designed to best position the Company to create long-term shareholder value through the proper combination of: —Systematic debt reduction —Fixed per-share dividend —Strategic share repurchases —Accretive strategic acquisitions We are proud to be part of the solution to the broader challenge of existing energy infrastructure and to do our part in driving our country’s energy, climate, and economic security – and we couldn’t do it without our OneDEC team. Robert R. (“Rusty”) Hutson, Jr. Chief Executive Officer March 19, 2024

Diversified is the Right

Company at the Right

Time to responsibly

manage existing

domestic natural gas

and oil production in a

manner that’s

consistent with

environmental

stewardship and a

lower-carbon energy

future.

“

A Differentiated Business Model


1		ACQUIRE
	We maintain a disciplined approach to evaluating opportunities to ensure that we only pursue those that possess a consistent asset profile. We target existing long-life, stable assets with synergistic opportunities that produce predictable and stable cash flows, are value accretive, margin enhancing and strategically complementary.

2		OPTIMIZE
	The primarily mature nature of the assets we acquire provides us with a portfolio of low-cost optimization opportunities. These optimization activities, applied through our internally developed SAM program, are strategically important as they aid in offsetting natural production declines, creating expense efficiency and reducing our emissions.

3		PRODUCE
	Our culture makes the difference as our team of industry veterans strive to efficiently produce as many units as possible in a safe and environmentally responsible manner, aligning both environmental and financial best interests.

4		TRANSPORT
	We seek to acquire midstream systems into which we are a large producer and more fully integrate those assets into our upstream portfolio to provide immediate and long-term synergies.

5		RETIRE
	We embrace our commitment to be a responsible operator of existing assets. With safety and environmental stewardship as top priorities, we design our asset retirement program to permanently retire wells that have reached the end of their producing lives. During 2022, we made investments that allowed us to meaningfully expand our asset retirement capabilities through a series of acquisitions that we believe have provided us with the operational capacity to be a leader in asset retirement.


DAILY OPERATING PRIORITIES

Safety
No compromises. Ensuring the care and well-being of our employees, our families, our partners and communities is our top priority.

Production
Every unit counts. Ensuring that every unit we safely produce provides affordable and reliable energy to our communities and generates value for our shareholders.

Efficiency
Every dollar counts. Ensuring every dollar we spend protects our employees and communities and grows the investment of our shareholders.

Enjoyment
Have fun delivering great results. Ensuring our company is an attractive place to work, encouraging innovation and celebrating our employees’ accomplishments.


STRATEGY
Acquire long-life stable assets
Operate our assets in a safe, efficient and responsible manner
Generate reliable free cash flow
Retire assets safely and responsibly


10	Diversified Energy Company PLC Annual Report and Form 20-F 2023



Priorities	Strategy	Sustainability	Risk
see page 7	see page 11	see page 33	see page 79


Our business model and the corporate culture we cultivate is unique among the natural gas and oil industry in that we do not engage in capital-intensive drilling and development. Rather, our stewardship model focuses on acquiring existing long-life, low-decline producing wells and, at times, their associated midstream assets, and then efficiently managing the assets to improve or restore production, reduce unit operating costs, reduce emissions and generate consistent free cash flow before safely and permanently retiring those assets at the end of their useful lives.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	11

Execute Commodity Hedges

to Secure Healthy Margins

Protect our ability to provide

durable shareholder returns

Generate Reliable

Free Cash Flow

Maintain adjusted EBITDA

margins, low capital intensity

and low LOE per unit

Provide Durable

Shareholder Returns

Create value for our

shareholders via debt

reduction, fixed dividends,

strategic share repurchases

and accretive acquisitions

Maintain A Healthy

Balance Sheet

Maintain low leverage, ample

liquidity and access to

additional capital for

opportunistic growth

Geographic

Operating

Areas

U.S. NATURAL GAS PLAYS

Our Operating Areas

CENTRAL REGION

Our Central Region includes parts of Texas, Louisiana and Oklahoma, and is home to a number of asset rich natural gas and oil

formations. We currently operate within Texas, Louisiana and Oklahoma in the following plays:

Haynesville, Bossier and Cotton Valley

While in a relatively similar geographic region of East Texas

and West Louisiana, the Bossier shale lies directly above the

Haynesville shale but beneath the Cotton Valley sandstones.

A key benefit to operations in this region is the ability to

access consistent natural gas pipeline transportation from

the wellhead to the Gulf Coast, an area of strong demand

and advantageous pricing. This access to strong pricing and

takeaway capacity has made it a desirable area for

developers and one of rapid growth, particularly in the

Haynesville, with Cotton Valley and Bossier viewed as more

mature. As the wells in this region continue to mature and

decline rates continue to shallow and become more

predictable, it will be a fertile ground for our

continued expansion.

Barnett

An original shale play in the U.S., the Barnett shale is located

in North Texas and is a geological formation rich in natural

gas. The Barnett is home to some of the first horizontal

drilling and hydraulic stimulation that occurred in the early

1990s, unlocking the U.S. shale revolution. For a time during

the early 2000s, the Barnett was the largest natural gas

producing shale play in the U.S. Though drilling in this area

has largely subsided, the maturity of the play with its now

vast portfolio of low decline rate wells makes this area

available for opportunities to complement our existing

mature portfolio through future acquisitions.

Mid Continent

The Mid Continent region stretches across Oklahoma, Kansas

and the Texas panhandle and is generally understood to

reference the Fayetteville, Woodford, Granite Wash,

Springer, Sycamore and Cana Woodford shale natural gas

plays along with numerous other conventional and

unconventional natural gas reservoirs in the Arkoma Basin,

Ardmore Basin and Anadarko Basin. This mature and

developed region has undergone a redevelopment

renaissance over the last several years through the use of

hydraulic stimulation and horizontal drilling. It is an asset rich

environment with an abundance of mature wells and

developed transportation infrastructure making it a valuable

complement to our current portfolio.


12	Diversified Energy Company PLC Annual Report and Form 20-F 2023




U.S. DRY SHALE GAS PRODUCTION billion cubic feet per day



Sources: Graph by the U.S. Energy Information Administration (“EIA”) based on state administrative data collected by Enverus. Data are through December 2023. The EIA updated the factors it uses to convert gross natural gas to dry natural gas based on the latest data. The update affected historical production volumes from some formations. State abbreviations indicate primary state(s).


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	13


		Current play - oldest play
		Current play - intermedia depth/age play
		Current play - shallowest/youngest play
		Prospective play
		Basin

APPALACHIA

The Appalachian Basin spans

Pennsylvania, Virginia, West Virginia,

Kentucky, Tennessee and Ohio and

consists of two productive unconventional

shale formations, the Marcellus Shale and

the slightly deeper Utica Shale. Together

they accounted for 38% of all U.S. dry

natural gas production in 2023. Diversified

began operating here in 2001, more than

twenty years ago, firmly establishing the

Group as a consolidator of assets and

exceptional operator. Appalachia is home

to many mature, low-decline conventional

and unconventional wells matching our

target asset profile.


Strategy Our rapid growth and ability to generate consistent shareholder return stems from our unique business model and successful execution of straight-forward, low-risk, disciplined and proven operating techniques.



	ACQUIRE Acquire long-life stable assets We practice a disciplined approach to acquire long-life stable assets by targeting low-decline producing assets that are value accretive, high margin and strategically complementary, while also applying extensive environmental, social, land and legal due diligence.				OPERATE Operate our assets in a safe, efficient and responsible manner Our operational strategy and success is closely aligned with the culture we created through our four guiding operational priorities: Safety, Production, Efficiency and Enjoyment. These four daily priorities are brought to life as part of our SAM program which our team lives and breathes every day as they work to safely deliver clean, affordable and reliable energy.


	GENERATE Generate reliable free cash flow Our unique business model, coupled with the successful execution of the Acquire and Operate pillars of our corporate strategy, naturally lends itself to generating free cash flow. We aspire to make cash flows predictable and reliable so we can consistently generate shareholder return, pay down debt, fund acquisitive growth, and accomplish our sustainability goals and ambitions.				RETIRE Retire assets safely and responsibly At the appropriate time, through our safe and systematic asset retirement program, we safely and permanently retire wells and responsibly restore the well sites as close as possible to their original and natural condition. Our asset retirement program reflects our solid commitment to a healthy environment, the surrounding community and its citizens and state regulatory authorities.


14	Diversified Energy Company PLC Annual Report and Form 20-F 2023


	Acquire Long-Life Stable Assets


ONE DEC Foster a culture of operational excellence through the integration of People, Process and Systems		2023 ACHIEVEMENTS —Completed the Tanos II Central Region acquisition for $262 million, contributing approximately 69 MMcfepd to 2023 production. —Realized first full year of operations for Next LVL Energy. — Utilized environmental and climate screening of target assets to inform acquisition considerations. TARGETS FOR 2024 — We will persist in our disciplined approach to acquisitions, focusing on producing assets that align with our stringent investment criteria. —We will maintain liquidity discipline, ensuring we remain well-positioned in the market to seize opportunities as they arise. —Our growth strategy will continue to emphasize complementary and synergistic expansion in the Appalachian and Central regions. We will foster strong relationships with development-oriented producers in our operating areas. —We will actively screen and execute on new basin opportunities, staying agile and responsive to emerging prospects.


ACQUIRE Target low-decline, producing assets that complement our returns-focused strategy


INTEGRATE Onboard employees, integrate processes and systems to drive efficiencies and standardization


OPTIMIZE Empower retained personnel to apply our SAM techniques on acquired assets


CONSOLIDATE Enhance operating, marketing relationships with increasing scale

PRINCIPAL RISKS —Corporate Strategy and Acquisition Risk —Financial Strength and Flexibility Risk —Climate Risk		KEY PERFORMANCE INDICATORS —Maintain net debt-to-adjusted EBITDA at or below 2.5x —Emissions intensity —Adjusted operating cost per Mcfe

Indicates sustainability achievements and targets.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	15


	Operate our Assets in a Safe, Efficient and Responsible Manner


GOAL Improve safety, optimize production, increase expense efficiency and improve emissions profile		2023 ACHIEVEMENTS —Annual production of 299,632 MMcfe. —Adjusted EBITDA margin of 52%. — Achieved 2023 goal to conduct fugitive emission surveys on 100% of Central Region upstream assets. — Collectively, conducted ~246,000 voluntary fugitive emission detection surveys within our upstream portfolio, confirming an average ~98% no- leak rate on surveyed sites and allowing us to take meaningful steps towards reducing our emissions profile. — Completed aerial light detection and ranging (“LiDAR”) surveys covering~10,000 miles of midstream systems which also included ~9,000 sites (wells, compressor stations and other facilities). — Zero non-compliance issues cited after participating in 16 state and federal regulatory agency audits of our operational assets and compliance programs which were completed as part of routine monitoring programs. — Our safety-no compromises culture contributed to our preventable motor vehicle accident rate (“MVA”) declining 20% year-over-year to 0.55 (accidents to million miles driven). — Expanding continuous remote monitoring capabilities through our Gas Control and Integrated Operations Centers promotes safety and efficiency through enhanced visibility of operations. TARGETS FOR 2024 —We will continue to execute our guiding priorities: Safety, Production, Efficiency, and Enjoyment. — Our commitment to responsible stewardship remains unwavering. We will intensely focus on continuous improvement across all sustainability aspects, aiming to exceed our stakeholders’ expectations. —We will maintain our focus on the SAM program to uphold margins, offset natural declines, and capitalize on expense efficiency opportunities.


PROCESS “Data + Human Interaction” coupled with production technology systems, drive activities, process enhancements, refine best practice techniques


RESULT Practical, profit-focused SOLUTIONS developed by our experienced teams


ONGOING INITIATIVES







PRINCIPAL RISKS —Corporate Strategy and Acquisition Risk —Climate Risk —Cybersecurity Risk —Health and Safety Risk —Regulatory and Political Risk —Financial Strength and Flexibility Risk		KEY PERFORMANCE INDICATORS —Safety Performance —Emissions intensity —Consistent adjusted EBITDA margin —Adjusted operating cost per Mcfe —Net cash provided by operating activities

Indicates sustainability achievements and targets.


16	Diversified Energy Company PLC Annual Report and Form 20-F 2023


	Generate Reliable Free Cash Flow


PRUDENT ALLOCATION OF CASH FLOW		2023 ACHIEVEMENTS —Raised our weighted average hedge floor on natural gas production to $3.87 per Mcf at December 31, 2023 from $3.63 per Mcf at December 31, 2022. —Repaid $277 million in asset backed securitizations illustrating the substantial cash flow generated by our assets. —Repurchased 646,762 shares through our Share Buyback Program, representing $11 million in shareholder value above and beyond the $168 million in dividend distributions. — Delivered on our sustainability investment commitment to convert additional natural gas pneumatic devices to compressed air, converting 58 well pads exceeding our goal to convert 30 well pads. We also had significant success with our upstream emissions detection surveys, completed year two of aerial surveillance activities for our midstream assets, and contributed to tree planting and land preservation initiatives primarily with West Virginia State University. TARGETS FOR 2024 —We will maintain our effective hedging strategy to insulate cash flows. Additionally, we’ll make the most of accretive market opportunities to raise our hedge book floor. — Our focus remains on securing low-cost sustainability-linked financing. This will support our acquisitive growth while ensuring low leverage and ample liquidity. — We will continue to invest in sustainability initiatives, reinforcing our commitment to responsible practices.

Allocating Cash Flow

	Debt Repayment Reduce outstanding debt & create liquidity

	Reinvestment & Growth Reinvest for organic growth & reduce reliance on equity and debt markets

	Sustainability Invest in broad spectrum of sustainability initiatives

	Dividend Distributions Pay sustainable dividends

	Share Buyback Program Reduce outstanding shares & increase shareholder value


PRINCIPAL RISKS —Corporate Strategy and Acquisition Risk —Commodity Price Volatility Risk —Financial Strength and Flexibility Risk		KEY PERFORMANCE INDICATORS —Maintain net debt-to-adjusted EBITDA at or below 2.5x —Consistent adjusted EBITDA margin —Emissions intensity —Adjusted operating cost per Mcfe —Net cash provided by operating activities

Indicates sustainability achievements and targets.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	17


	Retire Assets Safely and Responsibly and Restore the Environment to its Natural State


	STEP 1 DEACTIVATION Remove product from production equipment.	2023 ACHIEVEMENTS — We expanded our asset retirement operations from 15 to 17 rigs. — We successfully retired 222 DEC wells, including 21 Central Region wells. This achievement surpasses our goal of retiring 200 wells by 2023 and also exceeds our collective state commitments in Appalachia to retire 80 wells in our primary states of operation. — We further retired 182 third-party wells, including 148 state and federal orphan wells and 34 for other third party operators, bringing the total wells retired in Appalachia by the Next LVL team to 383 wells. — We permanently retired 18 wells on lands managed by the Pennsylvania Game Commission. We then restored well sites to their natural condition by planting native trees to the region. This dual effort not only reduced noise pollution but also contributed to the restoration of bird habitats. TARGETS FOR 2024 — Continue to safely retire wells and aim to exceed state asset retirement programme commitments by identifying and retiring wells at the end of their productive lives. — Continue to optimize the vertical integration benefits we can realize with our expanded internal asset retirement capacity. — Continue constructive and collaborative dialogue with states and industry associations to innovate and ensure best practices in the well retirement arena.



	STEP 2 WELL DECOMMISSIONING Permanently plug and cap wellbore.



	STEP 3 SITE DECOMMISSIONING Remove and salvage/dispose of equipment.



	STEP 4 RECLAMATION Redistribute soil and revegetate for return to original state.










PRINCIPAL RISKS —Health and Safety Risk —Regulatory and Political Risk —Climate Risk —Financial Strength and Flexibility Risk		KEY PERFORMANCE INDICATORS —Net cash provided by operating activities —Meet or exceed state asset retirement goals —Emissions intensity

Indicates sustainability achievements and targets.


18	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Key Performance Indicators

In assessing our performance, the Directors use key performance indicators (“KPIs”) to track our success against our stated

strategy. The Directors assess our KPIs on an annual basis and modify them as needed, taking into account current business

developments. The following KPIs focus on corporate and environmental responsibility, consistent cash flow generation

underpinned by prudent cost management, low leverage and adequate liquidity to protect the sustainability of the business.

Please refer to the APMs section in Additional Information within this Annual Report & Form 20-F for information on how

these metrics are calculated and reconciled to IFRS measures.



MAINTAIN NET DEBT-TO-ADJUSTED EBITDA AT OR BELOW 2.5x During 2023 our leverage ratio remained consistent at 2.3x and within our preferred goal of 2.0x to 2.5x. LINK TO STRATEGY —Acquire long-life stable assets —Generate reliable free cash flow (a)2023 is pro forma for the Tanos II acquisition completed in March 2023. 2022 is pro forma for the East Texas Assets and ConocoPhillips acquisitions. 2021 is pro forma for the Indigo, Blackbeard, Tanos and Tapstone acquisitions as well as Oaktree’s subsequent participation in the Indigo transaction.			NET DEBT-TO-PRO FORMA ADJUSTED EBITDA(a)



CONSISTENT ADJUSTED EBITDA MARGIN Total revenue, inclusive of settled hedges for 2023 was $1,046 million, an increase of 2% compared to 2022. Adjusted EBITDA for 2023 was $543 million, an increase of 8% compared to 2022. LINK TO STRATEGY —Generate reliable free cash flow —Operate our assets in a safe, efficient and responsible manner			ADJUSTED EBITDA MARGIN


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	19



ADJUSTED OPERATING COST PER MCFE Adjusted operating cost per Mcfe for 2023 was $1.76, a decrease of 1% compared with 2022. LINK TO STRATEGY —Operate our assets in a safe, efficient and responsible manner —Generate reliable free cash flow			ADJUSTED OPERATING COST PER MCFE



NET CASH PROVIDED BY OPERATING ACTIVITIES Net cash provided by operating activities for 2023 was $410 million an increase of 6% compared with 2022. LINK TO STRATEGY —Operate our assets in a safe, efficient and responsible manner —Generate reliable free cash flow —Retire assets safely and responsibly and restore the environment to its natural state			NET CASH PROVIDED BY OPERATING ACTIVITIES



EMISSIONS INTENSITY Significant improvement in our Scope 1 methane emissions intensity is primarily a result of our team’s steadfast focus on leak detection and mitigation across our portfolio, including meeting current year objectives to survey 100% of Central Region upstream assets while continuing like surveys in Appalachia to maintain no leak rates. Conversion of natural gas-driven pneumatic devices to compressed air also supported this tremendous achievement of a 33% year- over-year reduction. LINK TO STRATEGY —Acquire long-life stable assets —Operate our assets in a safe, efficient and responsible manner —Generate reliable free cash flow —Retire assets safely and responsibly and restore the environment to its natural state			METHANE EMISSIONS INTENSITY (MT CO2e/MMcfe)


20	Diversified Energy Company PLC Annual Report and Form 20-F 2023



MEET OR EXCEED STATE ASSET RETIREMENT GOALS During 2023, we meaningfully expanded our asset retirement operations and permanently retired 222 wells, inclusive of our Central Regions operations. This achievement allowed us to more than double our Appalachian state requirements of 80 wells and exceed our goal to retire 200 wells by the end of 2023. Additionally, with our Next LVL Energy assets, we plugged 182 wells for third parties, including other operators and for the states of Ohio, Pennsylvania and West Virginia. LINK TO STRATEGY —Retire assets safely and responsibly and restore the environment to its natural state (a)DEC wells inclusive of 14 and 21 Central Region wells retired during 2022 and 2023, respectively.			ACTUAL WELLS RETIRED(a)



SAFETY PERFORMANCE Our 2023 MVA rate is 0.55 incidents per million miles driven, a 20% improvement from 2022. Though five of nine operating areas incurred zero incidents in 2023, including two states who have not recorded an incident in more than four years, TRIR increased to 1.28, primarily driven by an increase in reported incidents in the remaining areas, in part a function of short-service employees with less than one year experience under the Group’s safety expectations. A new Safety Strategy Committee has been created to identify and advance specific areas for improvement and accountability. LINK TO STRATEGY —Operate our assets in a safe, efficient and responsible manner			MOTOR VEHICLE ACCIDENTS & TOTAL RECORDABLE INCIDENT RATE


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	21

Our Business

HISTORY AND DEVELOPMENT OF THE GROUP

The Group, formerly Diversified Gas & Oil PLC, is an

independent energy company engaged in the production,

transportation and marketing of natural gas as well as oil

from its complementary onshore upstream and midstream

assets, primarily located within the Appalachian and Central

Regions of the United States. Our Appalachia assets consist

primarily of producing wells in conventional reservoirs and

the Marcellus and Utica shales, within Pennsylvania, Ohio,

Virginia, West Virginia, Kentucky, and Tennessee, while our

Central Region, located in Oklahoma, Louisiana, and

portions of Texas, includes producing wells in multiple

producing formations, including the Bossier, Haynesville

Shale and Barnett Shale Plays, as well as the Cotton Valley

and the Mid-Continent producing areas. The Group was

incorporated in 2014 in the United Kingdom, and our

predecessor business was founded in 2001 by our Chief

Executive Officer, Robert Russell (“Rusty”) Hutson, Jr., with

an initial focus on primarily natural gas and also oil

production in West Virginia. In recent years, we have grown

rapidly by capitalizing on opportunities to acquire and

enhance producing assets and leveraging the operating

efficiencies that result from economies of scale. Since 2017,

and through December 31, 2023, we have completed 24

acquisitions for a combined purchase price of

approximately $2.7 billion. We had average daily net

production of 821 MMcfepd and 811 MMcfepd for the years

ended December 31, 2023 and December 31,

2022, respectively.

We have consistently driven our operations towards

sustainability and efficiency throughout our history, but we

believe we are also at the forefront of U.S. natural gas and

oil producers in our commitment to sustainability goals.

While the global energy economy is reliant on natural gas

as an energy source, we believe it is imperative that natural

gas wells and pipelines be operated by responsible owners

with a strong commitment to the environment, and we

believe our operational track record demonstrates that

responsibility and stewardship. Given our operational focus

on efficient, environmentally sound natural gas production,

we believe we are ideally positioned to help serve current

energy demands and play a key role in the clean

energy transition.

Other Information

We were incorporated as a public limited company with the

legal name Diversified Gas & Oil PLC under the laws of the

United Kingdom on July 31, 2014 with the company number

09156132. On May 6, 2021, we changed our company name

to Diversified Energy Company PLC.

Our registered office is located at 4th Floor Phoenix House,

1 Station Hill, Reading, Berkshire United Kingdom, RG1 1NB.

In February 2017, our shares were admitted to trading on

the AIM Market of the London Stock Exchange (“AIM”)

under the ticker “DGOC.” In May 2020, our shares were

admitted to the premium listing of the Official List of the

Financial Conduct Authority and to trading on the Main

Market of the LSE. With the change in corporate name in

2021, our shares listed on the LSE began trading under the

new ticker “DEC.” In December 2023, the Group’s shares

were admitted to trading on the New York Stock Exchange

(“NYSE”) under the ticker “DEC.” As of December 31, 2023,

the principal trading market for the Group’s ordinary shares

was the LSE.

Our principal executive offices are located at 1600

Corporate Drive, Birmingham, Alabama 35242, and our

telephone number at that location is +1 205 408 0909. Our

website address is www.div.energy. The information

contained on, or that can be accessed from, our website

does not form part of this Annual Report & Form 20-F. We

have included our website address solely as an inactive

textual reference.


22	Diversified Energy Company PLC Annual Report and Form 20-F 2023


		Safety No compromises Ensuring the care and wellbeing of our employees, our families and our communities is our top priority
		Production Every unit counts Ensuring every unit we safely produce provides affordable, reliable energy to our communities and generates value for our shareholders
		Efficiency Every dollar counts Ensuring every dollar we spend protects our employees, our communities and the investment of our shareholders
		Enjoyment Have fun delivering great results Ensuring our company is a great place to work, encouraging innovation and celebrating our employees’ accomplishments

BUSINESS OVERVIEW

Our strategy is primarily to acquire and manage natural gas

and oil properties while leveraging our associated

midstream assets to maximize cash flows. We seek to

improve the performance and operations of our acquired

assets through our deployment of rigorous field

management programs and/or refreshing infrastructure.

Through operational efficiencies, we demonstrate our

ability to maximize value by enhancing production while

lowering costs and improving well productivity. We adhere

to stringent operating standards, with a strong focus on

health, safety and the environment to ensure the safety of

our employees and the local communities in which we

operate. We believe that acting as a careful steward of our

assets will improve revenue and margins through captured

natural gas emissions while reducing operating costs, which

benefits our profitability. This focus on operational

excellence, including the aim of reducing natural gas

emissions, also benefits the environment and communities

in which we operate.

OUR BUSINESS STRATEGY

—Optimization of long-life, low-decline assets to enhance

margins and improve cash flow

—Generate consistent shareholder returns through vertical

integration, strategic hedging and cost optimization

—Disciplined growth through accretive acquisitions of

producing assets

—Maintain a strong balance sheet with ability to

opportunistically access capital markets

—Operate assets in a safe, efficient manner with what we

believe are industry-leading sustainability initiatives

OUR STRENGTHS

—Low-risk and low-cost portfolio of assets

—Long-life and low-decline production

—High margin assets benefiting from significant scale and

owned midstream and asset retirement infrastructure

and internal product marketing team

—Highly experienced management and operational team

—Track record of successful consolidation and integration

of acquired assets

OUTLOOK

Looking forward, we will continue to prudently manage our

long-life, low-decline asset portfolio and the consistent

cashflows they produce. We plan to maintain our hedging

strategy to protect cash flow. We will seek to retain our

strategic advantages in purposeful growth through a

disciplined acquisition strategy that continues to secure

low-cost financing that supports acquisitive growth while

maintaining low leverage and ample liquidity. In addition,

we intend to remain proactive in our sustainability

endeavors by seeking to secure future capital allocation for

sustainability initiatives.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	23

RESERVE DATA

Summary of Reserves

The following table presents our estimated net proved reserves, Standardized Measure and PV-10 as of December 31, 2023,

using SEC pricing. Standardized Measure has been presented inclusive and exclusive of taxes and is based on the proved

reserve report as of such date by Netherland, Sewell & Associates, Inc. (“NSAI”), our independent petroleum engineering firm.

A copy of the proved reserve report is included as an exhibit to the Annual Report & Form 20-F. Refer to the Preparation of

Reserve Estimates and Estimation of Proved Reserves sections within this Annual Report & Form 20-F for a definition of

proved reserves and the technologies and economic data used in their estimation.


	December 31, 2023
	SEC Pricing(a)
Proved developed reserves
Natural gas (MMcf)	3,184,499
NGLs (MBbls)	94,391
Oil (MBbls)	12,380
Total proved developed reserves (MMcfe)	3,825,125
Proved undeveloped reserves
Natural gas (MMcf)	15,545
NGLs (MBbls)	1,310
Oil (MBbls)	236
Total proved undeveloped reserves (MMcfe)	24,821
Total proved reserves
Natural gas (MMcf)	3,200,044
NGLs (MBbls)	95,701
Oil (MBbls)	12,616
Total proved reserves (MMcfe)	3,849,946
Prices used
Natural gas (Mmbtu)	$2.64
Oil and NGLs (Bbls)	$78.21
PV-10 (thousands)
Pre-tax (Non-GAAP)(b)	$2,139,690
PV of Taxes	(394,154)
Standardized Measure	$1,745,536
Percent of estimated total proved reserves that are:
Natural gas	83%
Proved developed	99%
Proved undeveloped	1%

(a)Our estimated net proved reserves were determined using average first-day-of-the-month prices for the prior 12 months in accordance with

SEC guidance. For natural gas volumes, the average Henry Hub spot price of $2.64 per MMBtu as of December 31, 2023 was adjusted for

gravity, quality, local conditions, gathering and transportation fees, and distance from market. For NGLs and oil volumes, the average WTI

price of $78.21 per Bbl as of December 31, 2023 was similarly adjusted for gravity, quality, local conditions, gathering and transportation fees,

and distance from market. All prices are held constant throughout the lives of the properties.

(b)The PV-10 of our proved reserves as of December 31, 2023 was prepared without giving effect to taxes or hedges. PV-10 is a non-GAAP and

non-IFRS 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. We believe that the presentation of PV-10 is relevant and useful to our

investors as supplemental disclosure to the Standardized Measure because it presents the discounted future net cash flows attributable to

our reserves prior to taking into account future corporate income taxes and our current tax structure. 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. Because of this, PV-10 can be used within the industry and by creditors and securities analysts to evaluate

estimated net cash flows from proved reserves on a more comparable basis. Investors should be cautioned that neither PV-10 nor the

Standardized Measure represents an estimate of the fair market value of our proved reserves.

Proved Reserves

As of December 31, 2023, our estimated proved reserves totaled 3,849,946 MMcfe, a decrease of 24% from the prior year-end

with a Standardized Measure of $1.7 billion. Natural gas constituted approximately 83% of our total estimated proved reserves

and 83% of our total estimated proved developed reserves. The following table provides a summary of the changes in our

proved reserves during the years ended December 31, 2023, 2022 and 2021.


24	Diversified Energy Company PLC Annual Report and Form 20-F 2023


	Total (MMcfe)
Total proved reserves as of December 31, 2020	3,250,588
Extensions and discoveries	—
Revisions to previous estimates	541,509
Purchase of reserves in place	1,260,514
Sales of reserves in place	(164,039)
Production	(259,543)
Total proved reserves as of December 31, 2021	4,629,029
Extensions and discoveries	13,326
Revisions to previous estimates	379,812
Purchase of reserves in place	331,043
Sales of reserves in place	(6,912)
Production	(296,121)
Total proved reserves as of December 31, 2022	5,050,177
Extensions and discoveries	1,012
Revisions to previous estimates	(659,379)
Purchase of reserves in place	126,803
Sales of reserves in place	(369,035)
Production	(299,632)
Total proved reserves as of December 31, 2023	3,849,946

Extensions and Discoveries

During 2023, 1,012 MMcfe were adjusted due to well assignments recorded in the accounting actuals.

During 2022, we elected to participate in select development activities on a non-operated basis generating 13,326 MMcfe

in reserves.

During 2021, no reserves were added from extension or discovery activities.

Revisions to Previous Estimates

During 2023, we recorded 659,379 MMcfe in revisions to previous estimates. The downward revisions were primarily

associated with changes in the trailing 12-month average realized Henry Hub first day spot price, which decreased

approximately 58% as compared to the December 31, 2022 along with a 17% decrease in the 12 month average WTI first day

spot price. These factors primarily drove a net downward revision that impacted well economics and well life.

During 2022, we recorded 379,812 MMcfe in revisions to previous estimates. These positive performance revisions were

primarily associated with changes in the trailing 12-month average realized Henry Hub spot price, which increased

approximately 77% as compared to the December 31, 2021 Henry Hub spot price due to the war between Russia and Ukraine,

as well as other geopolitical factors. These factors primarily drove a net upward revision of 386,064 MMcfe due to changes in

pricing that impacted well economics. These increases were offset by a 6,252 MMcfe downward revision for changes in timing.

During 2021, 541,509 MMcfe in revisions to previous estimates were primarily associated with changes in the 12-month average

realized Henry Hub spot price, which increased approximately 81% as compared to December 31, 2020.

Purchase of Reserves in Place

During 2023, 126,803 MMcfe of purchases of reserves in place were associated with the Tanos II acquisition. Refer to Note 5 in

the Notes to the Group Financial Statements for additional information about these acquisitions.

During 2022, 331,043 MMcfe of purchases of reserves in place were associated with the East Texas and ConocoPhillips

acquisitions. Refer to Note 5 in the Notes to the Group Financial Statements for additional information about

these acquisitions.

During 2021, 1,260,514 MMcfe of purchases of reserves in place were associated with the Indigo, Tanos, Blackbeard and

Tapstone acquisitions. Refer to Note 5 in the Notes to the Group Financial Statements for additional information about these

acquisitions.

Sales of Reserves in Place

During 2023, 369,035 MMcfe of sales of reserves in place were primarily associated with the divestitures of non-core assets.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	25

During 2022, 6,912 MMcfe of sales of reserves in place were primarily associated with the divestitures of non-core assets.

During 2021, 164,039 MMcfe of sales of reserves in place were primarily associated with the divestment of assets to Oaktree for

their subsequent participation in the Indigo acquisition. Refer to Note 5 in the Notes to the Group Financial Statements for

additional information about divestitures.

Proved Undeveloped Reserves

We aim to obtain proved developed producing wells through acquisitions in accordance with our growth strategy rather than

through development activities. We accordingly contribute limited capital to development activities. From time to time, when

acquiring packages of wells, we will acquire certain locations that are in development by the acquiree at the time of the

acquisition or could be developed in the future. When economic, we will engage third parties to complete the existing

development activities, and such reserves are included below as proved undeveloped reserves. We do not have a

development program and, as a result, any additional undrilled locations that we hold cannot be classified as undeveloped

reserves in accordance with SEC rules unless a development plan is in place. As of December 31, 2023, we had no such

development plans and therefore have not classified these undrilled locations as proved undeveloped reserves.

The following table summarizes the changes in our estimated proved undeveloped reserves during the years ended

December 31, 2023, 2022 and 2021:


	Total (MMcfe)
Proved undeveloped reserves as of December 31, 2020	—
Extensions and discoveries	—
Revisions to previous estimates	—
Purchase of reserves in place	3,505
Sales of reserves in place	—
Converted to proved developed reserves	—
Proved undeveloped reserves as of December 31, 2021	3,505
Extensions and discoveries	8,832
Revisions to previous estimates	—
Purchase of reserves in place	—
Sales of reserves in place	—
Converted to proved developed reserves	(3,505)
Proved undeveloped reserves as of December 31, 2022	8,832
Extensions and discoveries	—
Revisions to previous estimates	—
Purchase of reserves in place	24,821
Sales of reserves in place	(8,832)
Converted to proved developed reserves	—
Proved undeveloped reserves as of December 31, 2023	24,821

Extensions and Discoveries

During 2023, no reserves were added from extension or discovery activities.

During 2022, we elected to participate in select development activities where third parties were engaged to complete the

development. Seven of these wells were in progress as of December 31, 2022, generating 8,832 MMcfe in proved

undeveloped reserves.

During 2021, no reserves were added from extension or discovery activities.

Purchase of Reserves in Place

During 2023, the 24,821 MMcfe of purchase of reserves in place were associated with the Tanos II acquisition and related to

four wells in progress that have been drilled and are awaiting hydraulic fracture stimulation.

During 2022, there were no purchases of proved undeveloped reserves in place.

During 2021, the 3,505 MMcfe of purchase of reserves in place were associated with the Tapstone Acquisition and related to

five wells that were under development as of December 31, 2021. We engaged third parties to complete this development

activity and during 2022 these were converted to proved developed reserves. Refer to Note 5 in the Notes to the Group

Financial Statements for additional information about acquisitions.


26	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Sales of Reserves in Place

During 2023, the 8,832 in sales of reserves in place were divested as part of the sale of 80% of the equity interest in DP Lion

Equity Holdco LLC in December 2023. Refer to Note 5 in the Notes to the Group Financial Statements for additional

information.

During 2022, there were no sales of reserves in place.

During 2021, there were no sales of reserves in place.

Developed and Undeveloped Acreage

The following table sets forth certain information regarding the total developed and undeveloped acreage in which we owned

an interest as of December 31, 2023. Developed acres are acres spaced or assigned to productive wells and do not include

undrilled acreage held by production under the terms of the lease. Undeveloped acres are acres on which wells have not been

drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of

whether such acreage contains proved reserves. Approximately 99.9% of our acreage was held by production at

December 31, 2023.


	Developed Acreage		Undeveloped Acreage		Total Acreage
	Gross(a)	Net(b)	Gross(a)	Net(b)	Gross(a)	Net(b)
As of December 31, 2023	5,600,383	3,039,447	8,005,314	5,519,159	13,605,697	8,558,606

(a)A gross acre is an acre in which a working interest is owned. The number of gross acres is the total number of acres in which a working

interest is owned.

(b)A net acre is deemed to exist when the sum of the fractional ownership working interests in gross acres equals one. The number of net acres

is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

The undeveloped acreage numbers presented in the table above have been compiled using best efforts to review and

determine acreage that is not currently drilled but may be available for drilling at the current time under certain circumstances.

Whether or not undrilled acreage may be drilled and thereafter produce economic quantities of oil or gas is related to many

factors which may change over time, including natural gas and oil prices, service vendor availability, regulatory regimes,

midstream markets, end user demand, and macro and micro financial conditions; the undeveloped acreage described herein is

presented without an opinion as to economic viability, as a result of the aforesaid factors. Additionally, it is noted that certain

formations on a land tract may be already developed while other formations are undeveloped.

The following table sets forth the number of total gross and net undeveloped acres as of December 31, 2023 that will expire in

2024, 2025 and 2026 unless production is established within the spacing units covering the acreage prior to the expiration

dates or unless such acreage is extended or renewed.


	Gross	Net
2024	5,404	663
2025	24,906	2,876
2026	2,869	87

Our primary focus is to operate our existing producing assets in a safe, efficient and responsible manner, however we also

assess areas subject to lease expiration for potential development opportunities when prudent. As of December 31, 2023, we

had no development plans other than the in-progress wells described above and therefore have not classified any other

potential undrilled locations on this acreage as proved undeveloped reserves.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	27

Preparation of Reserve Estimates

Our reserve estimates as of December 31, 2023 included in

this Annual Report & Form 20-F were independently

evaluated by our independent engineers, NSAI, in

accordance with petroleum engineering and evaluation

standards published by The Petroleum Resources

Management System jointly published by the Society of

Petroleum Engineers, the World Petroleum Council, the

American Association of Petroleum Geologists and the

Society of Petroleum Evaluation Engineers, as amended and

definitions and guidelines established by the SEC.

NSAI is a worldwide leader of petroleum property analysis

for industry and financial organizations and government

agencies. NSAI was founded in 1961 and performs

consulting petroleum engineering services under Texas

Board of Professional Engineers Registration No. F-2699.

Within NSAI, the technical persons primarily responsible for

auditing the estimates set forth in the NSAI reserves report

incorporated herein are Mr. Robert C. Barg and Mr. William

J. Knights. Mr. Barg, a Licensed Professional Engineer in the

State of Texas (No. 71658), has been practicing consulting

petroleum engineering at NSAI since 1989 and has over six

years of prior industry experience. He graduated from

Purdue University in 1983 with a Bachelor of Science

Degree in Mechanical Engineering. Mr. Knights, a Licensed

Professional Geoscientist in the State of Texas, Geology

(No. 1532), has been practicing consulting petroleum

geoscience at NSAI since 1991 and has over 10 years of prior

industry experience. He graduated from Texas Christian

University in 1981 with a Bachelor of Science Degree in

Geology in 1984 with a Master of Science Degree in

Geology. Both technical principals meet or exceed the

education, training and experience requirements set forth in

the Standards Pertaining to the Estimating and Auditing of

Oil and Gas Reserves Information promulgated by the

Society of Petroleum Engineers; both are proficient in

judiciously applying industry standard practices to

engineering and geoscience evaluations, as well as applying

SEC and other industry reserves definitions and guidelines.

Our internal staff of petroleum engineers and geoscience

professionals work closely with our independent reserve

engineers to ensure the integrity, accuracy and timeliness

of data furnished to our independent reserve engineers for

their reserve evaluation process. Our technical team

regularly meets with the independent reserve engineers to

review properties and discuss methods and assumptions

used to prepare reserve estimates. The reserve estimates

and related reports are reviewed and approved by our Vice

President of Reservoir Engineering. The Vice President of

Reservoir Engineering has been with the Group since 2018

and has 24 years of experience in petroleum engineering,

with over 20 years of experience evaluating natural gas and

oil reserves, and holds a Bachelor of Science in Petroleum

Engineering. Prior to joining the Group in 2018, our Vice

President of Reservoir Engineering served in various

reservoir engineering roles for public companies engaged in

the exploration and production operations, and is also a

member of the Society of Petroleum Engineers.

Estimation of Proved Reserves

Proved reserves are reserves which, by analysis of

geoscience and engineering data, can be estimated with

reasonable certainty to be economic1ally producible from a

given date forward from known reservoirs under existing

economic conditions, operating methods and government

regulations prior to the time at which contracts providing

the right to operate expires, unless evidence indicates that

renewal is reasonably certain. The term “reasonable

certainty” implies a high degree of confidence that the

quantities of oil or natural gas actually recovered will equal

or exceed the estimate. To achieve reasonable certainty, we

and the independent reserve engineers employed

technologies that have been demonstrated to yield results

with consistency and repeatability. The technologies and

economic data used in the estimation of our proved

reserves include, but are not limited to, well logs, geologic

maps and available downhole and production data,

micro-seismic data and well-test data.

Reserve engineering is and must be recognized as a

subjective process of estimating volumes of economically

recoverable oil and natural gas that cannot be measured in

an exact manner. The accuracy of any reserve estimate is a

function of the quality of available data and of engineering

and geological interpretation. As a result, the estimates of

different engineers often vary. In addition, the results of

drilling, testing and production may justify revisions of such

estimates. Accordingly, reserve estimates often differ from

the quantities of natural gas, NGLs and oil that are

ultimately recovered. Estimates of economically

recoverable natural gas, NGLs and oil and of future net cash

flows are based on a number of variables and assumptions,

all of which may vary from actual results, including geologic

interpretation, prices and future production rates and costs.

See Risk Factors for additional information.


28	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Productive Wells

Productive wells consist of producing wells, wells capable of production and wells awaiting connection to production facilities.

Gross wells are the total number of producing wells in which we have an interest, operated and non-operated, and net wells

are the sum of our fractional working interest owned in gross wells. The following table summarizes our productive natural gas

and oil wells as of December 31, 2023.


	As of December 31, 2023
Natural gas wells	71,471
Oil wells	3,044
Total gross productive wells	74,515

Natural gas wells	59,226
Oil wells	1,413
Total net productive wells	60,639


	As of December 31, 2023(a)
Total gross in progress wells	4.0
Total net in progress wells	3.8

(a)Comprised of wells in the Central Region.

Exploratory and Development Drilling Activities

Information regarding our drilling and development activities is set forth below:


	Development
	Productive Wells		Dry Wells		Total
Year	Gross	Net	Gross	Net	Gross	Net
2023	4	4	—	—	4	4
2022	5	2	—	—	5	2
2021	—	—	—	—	—	—

We drilled no exploratory wells (productive or dry) during the years ended December 31, 2023, 2022 and 2021.

During 2021, we completed the Tapstone Acquisition, which included five wells in the Central Region that were under

development by Tapstone as of December 31, 2021. We engaged third parties to complete this development activity, however

they remained in progress as of December 31, 2021.

During 2022, we completed the development of the five wells referenced in the preceding paragraph that had been under

development as of December 31, 2021. We then elected to participate in seven development opportunities on a non-

operating basis in our Appalachian Region. All seven of the Appalachian development wells remained in progress as of

December 31, 2022.

During 2023, we completed the development of two of the seven Appalachian wells that were under development as of

December 31, 2022. The remaining five Appalachian wells were divested in connection with the sale of 80% of the equity

interest in DP Lion Equity Holdco LLC in December 2023. On March 1, 2023, we also completed the Tanos II acquisition, which

included five wells in the Central Region that were under development at the date of acquisition. During 2023, we completed

one of these five wells. As of December 31, 2023, four Central Region development wells remain in progress. Refer to Note 5 in

the Notes to the Group Financial Statements for additional information regarding the sale of equity interest in DP Lion Equity

Holdco LLC.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	29

Production Volumes, Average Sales Prices and Operating Costs


	Year Ended
	December 31, 2023	December 31, 2022	December 31, 2021
Production
Natural Gas (MMcf)	256,378	255,597	234,643
NGLs (MBbls)	5,832	5,200	3,558
Oil (MBbls)	1,377	1,554	592
Total production (MMcfe)	299,632	296,121	259,543
Average realized sales price
(excluding impact of derivatives settled in cash)
Natural gas (Mcf)	$2.17	$6.04	$3.49
NGLs (Bbls)	24.23	36.29	32.53
Oil (Bbls)	75.46	89.85	65.26
Total (Mcfe)	$2.68	$6.33	$3.75
Average realized sales price
(including impact of derivatives settled in cash)
Natural gas (Mcf)	$2.86	$2.98	$2.36
NGLs (Bbls)	26.05	19.84	15.52
Oil (Bbls)	68.44	72.00	71.68
Total (Mcfe)	$3.27	$3.30	$2.51
Operating costs per Mcfe
LOE(a)	$0.71	$0.62	$3.31
Production taxes(b)	0.21	0.25	0.53
Midstream operating expense(c)	0.23	0.24	1.42
Transportation expense(d)	0.32	0.40	1.28
Total operating expense per Mcfe	$1.47	$1.51	$6.54

(a)LOE is defined as the sum of employee and benefit expenses, well operating expense (net), automobile expense and insurance cost.

(b)Production taxes include severance and property taxes. Severance taxes are generally paid on produced natural gas, NGLs and oil

production at fixed rates established by federal, state or local taxing authorities. Property taxes are generally based on the taxing

jurisdictions’ valuation of our natural gas and oil properties and midstream assets.

(c)Midstream operating expenses are daily costs incurred to operate our owned midstream assets inclusive of employee and benefit expenses.

(d)Transportation expenses are daily costs incurred from third-party systems to gather, process and transport our natural gas, NGLs and oil.

Significant Fields

The Group operates in four primary fields: (i) Appalachia, which is comprised of the stacked Marcellus and Utica shales and

other conventional formations (that form our Central Region) (ii) East Texas and Louisiana, which consists of the stacked

Cotton Valley, Haynesville, and Bossier shales, (iii) the Barnett Shale and (iv) the Midcontinent region, in North Texas and

Oklahoma, which also consists of various stacked plays. The following table presents production for the Group’s Appalachian

region, which is considered significant, or greater than 15% of the Group’s total proved reserves, for the periods presented.


	Year Ended
APPALACHIA	December 31, 2023	December 31, 2022	December 31, 2021
Production
Natural Gas (MMcf)	167,930	180,194	201,635
NGLs (MBbls)	3,018	2,810	2,690
Oil (MBbls)	394	423	446
Total production (MMcfe)	188,402	199,592	220,451


30	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Customers

Our production is generally sold on month-to-month contracts at prevailing market prices.

During the year ended December 31, 2023, no customers individually comprised more than 10% of total revenues.

During the year ended December 31, 2022, no customers individually comprised more than 10% of total revenues.

During the year ended December 31, 2021, two customers individually comprised more than 10% of total revenues,

representing 22% of consolidated revenues.

Because alternative purchasers of oil and natural gas are readily available, we believe that the loss of any of these purchasers

would not result in a material adverse effect on our ability to sell future oil and natural gas production. In order to mitigate

potential exposure to credit risk, we may require from time to time for our customers to provide financial security.

Delivery Commitments

We have contractually agreed to deliver firm quantities of natural gas to various customers, which we expect to fulfill with

production from existing reserves. We regularly monitor our proved developed reserves to ensure sufficient availability to

meet these commitments. The following table summarizes our total gross commitments, compiled using best estimates based

on our sales strategy, as of December 31, 2023.


	Natural gas (MMcf)
2024	70,769
2025	16,658
2026	—
Thereafter	360,114

Transportation and Marketing

Diversified Energy Marketing, LLC, our wholly owned

marketing subsidiary, specializes in commodity marketing,

asset optimization, producer services and the strategic

management of our transportation portfolio. Our mission

extends to enhancing operational efficiency and

profitability, leveraging market insights, operational

expertise, strategic asset management and the right sizing

of our contractual transport assets to ensure flow reliability

and access to various markets.

Our comprehensive suite of services encompasses the

marketing of natural gas, NGL’s and oil, risk management,

logistical support and the strategic management of

transportation agreements. This approach is designed to

maximize market presence, financial outcomes, ensure

consistent product flow and capitalize on strengthening

markets through our transportation infrastructure and

vertically integrated midstream systems. Our midstream

infrastructure and strategic arrangements enable us to

access high-demand markets, notably in the U.S. Gulf Coast

region, while leveraging low cost transportation in

Appalachia. The synergistic nature of our asset base allows

for access to advantageous pricing year-round and flow

assurance with minimal firm transportation agreements. As

of December 31, 2023, our transportation arrangements

provide access to 515 MMcfepd of takeaway capacity.

As a dedicated arm of the Group, our marketing team

ensures our operations and strategies are closely aligned

with our broader goals. With a team of experienced

professionals and a deep understanding of the energy

market’s nuances, we are committed to delivering value and

reliability to our stakeholders. We navigate through the

industry’s complexities to achieve operation excellence.

Competition

Our marketing activities compete with numerous other

companies offering the same services, many of which

possess larger financial and other resources than we have.

Some of these competitors are other producers and

affiliates of companies with extensive pipeline systems that

are used for transportation from producers to end users.

Other factors affecting competition are the cost and

availability of alternative fuels, the level of consumer

demand and the cost of and proximity to pipelines and

other transportation facilities. We believe that our ability to

compete effectively within the marketing segment in the

future depends upon establishing and maintaining strong

relationships with customers.

Seasonality

Demand for natural gas and oil generally decreases during

the spring and fall months and increases during the summer

and winter months. However, seasonal anomalies and

consumers’ procurement initiatives can also lessen seasonal

demand fluctuations. Seasonal anomalies can increase

competition for equipment, supplies and personnel and

can lead to shortages and increase costs or delay

our operations.

Title to Properties

We believe that we have satisfactory title to substantially all

of our active properties in accordance with standards

generally accepted in the oil and natural gas industry. Our

properties are subject to customary royalty and overriding

royalty interests, certain contracts relating to the

exploration, development, operation and marketing of

production from such properties, consents to assignment

and preferential purchase rights, liens for current taxes,

applicable laws and other burdens, encumbrances and

irregularities in title, which we believe do not materially

interfere with the use of or affect the value of such

properties. Prior to acquiring producing wells, we endeavor

to perform a title investigation on an appropriate portion of

the properties that is thorough and is consistent with

standard practice in the natural gas and oil industry.

Generally, we conduct a title examination and perform

curative work with respect to significant defects that we


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	31

identify on properties that we operate. We believe that we

have performed reasonable and protective title reviews

with respect to an appropriate cross-section of our

operated natural gas and oil wells.

GOVERNMENT REGULATION

General

Our operations in the United States are subject to various

federal, state and local (including county and municipal

level) laws and regulations. These laws and regulations

cover virtually every aspect of our operations including,

among other things: use of public roads; construction of

well pads, impoundments, tanks and roads; pooling and

unitizations; water withdrawal and procurement for well

stimulation purposes; wastewater discharge, well drilling,

casing and hydraulic fracturing; stormwater management;

well production; well plugging; venting or flaring of natural

gas; pipeline construction and the compression and

transportation of natural gas and liquids; reclamation and

restoration of properties after natural gas and oil operations

are completed; handling, storage, transportation and

disposal of materials used or generated by natural gas and

oil operations; the calculation, reporting and payment of

taxes on natural gas and oil production; and gathering of

natural gas production. Various governmental permits,

authorizations and approvals under these laws and

regulations are required for exploration and production as

well as midstream operations. These laws and regulations,

and the permits, authorizations and approvals issued

pursuant to such laws and regulations, are intended to

protect, among other things: air quality; ground water and

surface water resources, including drinking water supplies;

wetlands; waterways; protected plants and wildlife; natural

resources; and the health and safety of our employees and

the communities in which we operate.

We endeavor to conduct our operations in compliance with

all applicable U.S. federal, state and local laws and

regulations. However, because of extensive and

comprehensive regulatory requirements against a backdrop

of variable geologic and seasonal conditions,

non-compliance during operations can occur. Certain

non-compliance may be expected to result in fines or

penalties, but could also result in enforcement actions,

additional restrictions on our operations, or make it more

difficult for us to obtain necessary permits in the future. The

possibility exists that new legislation or regulations may be

adopted which could have a significant impact on our

operations or on our customers’ ability to use our natural

gas, natural gas liquids and oil, and may require us or our

customers to change their operations significantly or incur

substantial costs.

Environmental Laws

Many of the U.S. laws and regulations referred to above are

environmental laws and regulations, which vary according

to the jurisdiction in which we conduct our operations. In

addition to state or local laws and regulations, our

operations are also subject to numerous federal

environmental laws and regulations. Below is a discussion

of some of the more significant federal laws and regulations

applicable to us and our operations.

Clean Air Act

The federal Clean Air Act and associated Federal and state

regulations regulate air emissions through permitting and/

or emissions control requirements. These regulations affect

the entire value chain from oil and natural gas production,

to gathering, to processing, to transmission and storage,

and then to distribution operations. Various equipment and

activities in our assets are subject to regulation, including

compressors, engines, dehydrators, storage tanks,

pneumatic devices, fugitive components, and blowdowns.

We obtain permits, typically from state or local authorities,

or document exemptions necessary to authorize these

activities. Further, we are required to obtain pre-approval

for construction or modification of certain facilities, and/or

to use specific equipment, technologies or best

management practices to control emissions. Some states

also require a separate operating permit to be obtained for

on-going operations.

Federal and state governmental agencies continue to

review and revise the air quality regulations affecting oil

and natural gas activities, and further regulation could

increase our cost or otherwise affect our ability to produce.

For instance, on March 7, 2024, the U.S. Environmental

Protection Agency (“EPA”) finalized New Source

Performance Standard Subpart OOOOb (NSPS OOOOb) for

new, modified, and reconstructed sources after

December 6, 2022, and Emissions Guideline Subpart

OOOOc (EG OOOOc) for sources existing prior to

December 6, 2022. Most provisions of NSPS OOOOb take

effect immediately while certain requirements have phase-

in periods. EG OOOOc requires individual states to

incorporate similar provisions into their regulations (or rely

upon EPA’s model requirements) and will require

approximately five years to be implemented. The affected

source categories under OOOOb and OOOOc include well

completions, fugitive emissions, liquids unloading, process

controllers, process pumps, storage vessels, and

associated gas.

EPA has also recently proposed two interrelated

regulations. On August 1, 2023, EPA proposed revisions to

the greenhouse gas reporting rule for the oil and natural

gas industry to change the calculation methodology to be

primarily based on actual emission measurements rather

than emission factors. These changes facilitate the

implementation of a methane fee under the Waste Emission

Charge (WEC) rule which was proposed on

January 26, 2024. Both rules are expected to be finalized

by August 2024 as required by the Inflation Reduction Act

(IRA) of 2022. Under the WEC rule, reporters would be

subject to a fee beginning in 2025 at $900 per ton of

methane emissions that exceed thresholds prescribed

under the rule. These methane emissions would be based

on those reported under the greenhouse gas reporting rule.

Clean Water Act

The federal Clean Water Act (“CWA”) and corresponding

state laws affect our operations by regulating storm water

or other discharges of substances, including pollutants,

sediment, and spills and releases of oil, brine and other

substances, into surface waters, and in certain instances

imposing requirements to dispose of produced wastes and

other oil and gas wastes at approved disposal facilities. The

discharge of pollutants into jurisdictional waters is

prohibited, except in accordance with the terms of a permit

issued by the EPA, the U.S. Army Corps of Engineers, or a

delegated state agency. These permits require regular

monitoring and compliance with effluent limitations, and

include reporting requirements. Federal and state

regulatory agencies can impose administrative, civil and/or

criminal penalties for non-compliance with discharge

permits or other requirements of the CWA and analogous

state laws and regulations.


32	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Endangered Species and Migratory Birds

The Endangered Species Act and related state laws

regulations protect plant and animal species that are

threatened or endangered. The Migratory Bird Treaty Act

and the Bald and Golden Eagle Protection Act provides

similar protections to migratory birds and bald and golden

eagles, respectively. Some of our operations are located in

areas that are or may be designated as protected habitats

for endangered or threatened species, or in areas where

migratory birds or bald and golden eagles are known to

exist. Laws and regulations intended to protect threatened

and endangered species, migratory birds, or bald and

golden eagles could have a seasonal impact on our

construction activities and operations. New or additional

species that may be identified as requiring protection or

consideration could also lead to delays in obtaining permits

and/or other restrictions, including operational restrictions.

Safety of Gas Transmission and

Gathering Pipelines

Natural gas pipelines serving our operations are subject to

regulation by the U.S. Department of Transportation’s

PHMSA pursuant to the NGPSA, as amended by the Pipeline

Safety Act of 1992, the Accountable Pipeline Safety and

Partnership Act of 1996, the PSIA, the Pipeline Inspection,

Protection, Enforcement and Safety Act of 2006, and the

2011 Pipeline Safety Act. The NGPSA regulates safety

requirements in the design, construction, operation and

maintenance of natural gas pipeline facilities, while the PSIA

establishes mandatory inspections for all U.S. oil and natural

gas transmission pipelines in high-consequence areas.

Additionally, certain states, such as West Virginia, also

maintain jurisdiction over intrastate natural gas lines. In

October 2019, PHMSA finalized the first of three rules that,

collectively, are referred to as the natural gas “Mega Rule.”

The first rule imposed additional safety requirements on

natural gas transmission pipelines, including maximum

operating pressure and integrity management near HCAs

for onshore gas transmission pipelines. PHMSA finalized the

second rule extending federal safety requirements to

onshore gas gathering pipelines with large diameters and

high operating pressures in November 2021. PHMSA

published the final of the three components of the Mega

Rule in August 2022, which took effect in May 2023. The

final rule applies to onshore gas transmission pipelines,

clarifies integrity management regulations, expands

corrosion control requirements, mandates inspection after

extreme weather events, and updates existing repair

criteria for both HCA and non-HCA pipelines. Finally,

PHMSA published a Notice of Proposed Rulemaking

regarding more stringent gas pipeline leak detection and

repair requirements to reduce natural gas emissions on May

18, 2023. The adoption of laws or regulations that apply

more comprehensive or stringent safety standards could

increase the expenses we incur for gathering service.

Resource Conservation and Recovery Act

The federal Resource Conservation and Recovery Act

(“RCRA”) and corresponding state laws and regulations

impose requirements for the management, treatment,

storage and disposal of hazardous and non-hazardous

wastes, including wastes generated by our operations.

Drilling fluids, produced waters and most of the other

wastes associated with the exploration, development and

production of natural gas and oil are currently regulated

under RCRA’s solid (non-hazardous) waste provisions.

However, legislation has been proposed from time to time,

and various environmental groups have filed lawsuits, that,

if successful, could result in the reclassification of certain

natural gas and oil exploration and production wastes as

“hazardous wastes,” which would make such wastes subject

to much more stringent handling, disposal and clean-up

requirements. A change in the RCRA exclusion for drilling

fluids, produced waters and related wastes could result in

an increase in our costs to manage and dispose of

generated wastes, which could have a material adverse

effect on the industry as well as on our results of operations

and financial position.

Comprehensive Environmental Response,

Compensation, and Liability Act

The Comprehensive Environmental Response,

Compensation, and Liability Act (“CERCLA” or

“Superfund”) imposes joint and several liability for costs of

investigation and remediation, and for natural resource

damages without regard to fault or the legality of the

original conduct, on certain classes of persons with respect

to the release into the environment of substances

designated under CERCLA as hazardous substances. These

classes of persons, so-called potentially responsible parties

(“PRP”), include the current and past owners or operators

of a site where the release occurred and anyone who

disposed, transported, or arranged for the disposal,

transportation, or treatment of a hazardous substance

found at the site. CERCLA also authorized the EPA and, in

some instances, third parties to take actions in response to

threats to public health or the environment, and to seek to

recover from the PRPs the costs of such action. Many

states, including states in which we operate, have adopted

comparable state statutes.

Although CERCLA generally exempts “petroleum” from

regulation, in the course of our operations we have

generated and will generate wastes that may fall within

CERCLA’s definition of hazardous substances, and may

have disposed of these wastes at disposal sites owned and

operated by others. We may also be the owner or operator

of sites on which hazardous substances have been released.

In the event contamination is discovered at a site on which

we are or have been an owner or operator, or to which we

have sent hazardous substances, we could be jointly and

severally liable for the costs of investigation and

remediation and natural resource damages. Further, it is not

uncommon for neighboring landowners and other third

parties to file claims for personal injury and property

damage allegedly caused by hazardous substances or other

pollutants released into the environment.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	33

Oil Pollution Act

The primary federal law related to oil spill liability is the Oil

Pollution Act (“OPA”), which amends and augments oil spill

provisions of the Clean Water Act and imposes certain

duties and liabilities on certain “responsible parties” related

to the prevention of oil spills and damages resulting from

such spills in or threatening waters of the United States or

adjoining shorelines. A liable “responsible party” includes

the owner or operator of a facility, vessel or pipeline that is

a source of an oil discharge or that poses the substantial

threat of discharge. OPA assigns joint and several liability,

without regard to fault, to each liable party for oil removal

costs and a variety of public and private damages.

Although defenses exist to the liability imposed by OPA,

they are limited. In the event of an oil discharge or

substantial threat of discharge, we may be liable for costs

and damages.

Regulation of the Sale and Transportation of

Natural Gas, NGLs and Oil

The transportation and sale, or resale, of natural gas in

interstate commerce are regulated by the Federal Energy

Regulatory Commission (“FERC”) under the Natural Gas

Act of 1938, the Natural Gas Policy Act of 1978, and

regulations issued under those statutes. FERC regulates

interstate natural gas transportation rates and terms and

conditions of service, which affects the marketing of natural

gas that we produce, as well as the revenues we receive for

sales of our natural gas. FERC regulations require that rates

and terms and conditions of service for interstate service

pipelines that transport crude oil and refined products and

certain other liquids be just and reasonable and must not be

unduly discriminatory or confer any undue preference upon

any shipper. FERC regulations also require interstate

common carrier petroleum pipelines to file with FERC and

publicly post tariffs stating their interstate transportation

rates and terms and conditions of service.

Section 1(b) of the Natural Gas Act exempts natural gas

gathering facilities from regulation by FERC. However, the

distinction between federally unregulated gathering

facilities and FERC regulated transmission facilities is a

fact-based determination, and the classification of facilities

is the subject of ongoing litigation. We own certain natural

gas pipeline facilities that we believe meet the traditional

tests FERC has used to establish a pipeline’s primary

function as “gathering,” thus exempting it from the

jurisdiction of FERC under the Natural Gas Act.

Intrastate natural gas transportation is also subject to

regulation by state regulatory agencies. The basis for

intrastate regulation of natural gas transportation and the

degree of regulatory oversight and scrutiny given to

intrastate natural gas pipeline rates and services varies from

state to state. Like the regulation of interstate

transportation rates, the regulation of intrastate

transportation rates affects the marketing of natural gas

that we produce, as well as the revenues we receive for

sales of our natural gas.

FERC regulates the transportation of oil and NGLs on

interstate pipelines under the provisions of the Interstate

Commerce Act, the Energy Policy Act of 1992 and

regulations issued under those statutes. Intrastate

transportation of oil, NGLs and other products is dependent

on pipelines whose rates, terms and conditions of service

are subject to regulation by state regulatory bodies under

state statutes.

Natural gas, NGLs and crude oil prices are currently

unregulated, but Congress historically has been active in

the area of natural gas, NGLs and crude oil regulation. We

cannot predict whether new legislation to regulate sales

might be enacted in the future or what effect, if any, any

such legislation might have on our operations.

Health and Safety Laws

Our operations are subject to regulation under the federal

Occupational Safety and Health Act (“OSHA”) and

comparable state laws in some states, all of which regulate

health and safety of employees at our operations.

Additionally, OSHA’s hazardous communication standard,

the EPA community right-to-know regulations under Title III

of the federal Superfund Amendment and Reauthorization


34	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Act and comparable state laws require that information be

maintained about hazardous materials used or produced by

our operations and that this information be provided to

employees, state and local governments and the public.

Climate Change Laws and Regulations

Climate change continues to be a legislative and regulatory

focus. There are a number of proposed and recently-

enacted laws and regulations at the international, federal,

state, regional and local level that seek to limit greenhouse

gas emissions, and such laws and regulations that restrict

emissions could increase our costs should the requirements

necessitate the installation of new equipment or the

purchase of emission allowances. For example, the Inflation

Reduction Act, which was signed into law in August 2022,

includes a “methane fee” that is expected to be imposed

beginning with emissions reported for calendar year 2024.

In addition, the current U.S. administration has proposed

more stringent methane pollution limits for new and

existing gas and oil operations. These laws and regulations

could also impact our customers, including the electric

generation industry, making alternative sources of energy

more competitive and thereby decreasing demand for the

natural gas and oil we produce. Additional regulation could

also lead to permitting delays and additional monitoring

and administrative requirements, in turn impacting

electricity generating operations.

At the international level, President Biden has recommitted

the United States to the UN-sponsored “Paris Agreement,”

for nations to limit their greenhouse gas emissions through

non-binding, individually-determined reduction goals every

five years after 2020. In April 2021, President Biden

announced a goal of reducing the United States’ emissions

by 50 – 52% below 2005 levels by 2030. In November 2021,

the international community gathered in Glasgow at the

26th Conference of the Parties to the UN Framework

Convention on Climate Change, during which multiple

announcements were made, including a call for parties to

eliminate certain fossil fuel subsidies and pursue further

action on non-carbon dioxide greenhouse gases. In a

related gesture, the United States and the European Union

jointly announced the launch of the “Global Methane

Pledge,” which aims to cut global methane pollution by at

least 30% by 2030 relative to 2020 levels, including “all

feasible reductions” in the energy sector. Such

commitments were re-affirmed at the 27th Conference of

the Parties in Sharm El Sheikh. Although it is not possible at

this time to predict how legislation or new regulations that

may be adopted pursuant to the Paris Agreement to

address greenhouse gas emissions would impact our

business, any such future laws and regulations imposing

reporting obligations on, or limiting emissions of

greenhouse gases from, our equipment and operations

could require us to incur costs to implement such measures

associated with our operations.

In addition, activists concerned about the potential effects

of climate change have directed their attention at sources

of funding for energy companies, which has resulted in

certain financial institutions, funds and other sources of

capital restricting or eliminating their investment in natural

gas and oil activities. Ultimately, this could make it more

difficult to secure funding for exploration and production

activities. Litigation risks are also increasing, as a number of

cities and other local governments have sought to bring

suits against the largest oil and natural gas exploration and

production companies in state or federal court, alleging,

among other things, that such companies created public

nuisances by producing fuels that contributed to global

climate change effects, such as rising sea levels, and

therefore are responsible for roadway and infrastructure

damages, or alleging that the companies have been aware

of the adverse effects of climate change for some time but

defrauded their investors by failing to adequately disclose

those impacts.

Additionally, the SEC published its long-awaited climate

rule in early March 2024, requiring the disclosure of a range

of climate-related risks and financial impacts. We are

currently assessing this rule, and at this time we cannot

predict the costs of implementation or any potential

adverse impacts for either the Group or our customers

resulting from the rule. Additionally, enhanced climate

disclosure requirements could accelerate the trend of

certain stakeholders and lenders restricting or seeking more

stringent conditions with respect to their investments in

certain carbon-intensive sectors.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	35

A Letter from Our Senior

VP of Sustainability





			“
			We remain focused on environmental stewardship as well as meaningful and effective employee and community engagement, delivered with an intentional adherence to a strong foundation of good governance.”

Sustainability Review

Thank you for your interest in Diversified’s sustainability

journey, which we believe aligns with not only our

stewardship business model but also value creation for our

stakeholders. I am pleased to share this annual review of

the successes and challenges on our 2023 journey,

inclusive of updates on key environmental, social and

governance objectives.

Of primary importance and consideration to our

sustainability efforts is our environmental impact, and

specifically our emissions footprint. During 2023, our well

tenders and midstream personnel remained focused on

progressing voluntary leak detection and repairs and other

emission reduction initiatives, while our environmental

teams were equally focused on identifying, researching and

field testing a multitude of emission abatement or reduction

technology alternatives for consideration in our near- and

long-term emissions reduction roadmap in order to achieve

our stated 2040 net zero goal.

These diligent efforts benefited the Group alongside both

our long-standing, proven Smarter Asset Management

optimization and efficiency improvement actions and the

increasingly demonstrable environmental and risk

mitigation wins from our multiple remote monitoring Gas

Control and Integrated Operating centers.

As we have said before, we are committed to reporting

transparently on our performance, even when it falls short

of our expectations. For example, our 2023 personal safety

performance did not meet our high standards as it relates

specifically to Total Recordable Incident Rate which

increased year-over-year as a result of an increase in

reported incidents. While our OneDEC corporate culture

and number one daily priority of ‘Safey-No Compromises’

remains steadfast, what is changing is our approach of how

improvement is best achieved.

Much like we did previously when liquids spill rates were

not meeting our expectations, we have already begun

dedicating focused time, attention and manpower to this

matter to ascertain how best to move forward with making

improvements. Having identified accountability as a key

contributor to this shortfall, we have already begun

addressing accountability with both field leadership and

staff. We look forward to sharing more about these actions

as we work towards delivering on the high expectations we

set for ourselves.

During 2023, we also updated our periodic materiality

assessment with both internal and external stakeholders,

the results of which reflected that employee safety remains

our top priority across the stakeholder groups. These

results reinforce our desire and drive to promptly and

appropriately address all matters related to employee

safety, beginning with our work thus far on TRIR.

We remain committed to setting appropriate objectives

related to our sustainability journey and reporting

transparently on the same. This priority is being recognized

in the marketplace as evidenced by our 2022 Sustainability

Report receiving the ESG Report of the Year award from

ESG Awards 2023 and that same report driving an

improved MSCI ESG rating score to Leadership status.

Furthermore, the Oil and Gas Methane Partnership 2.0 has

awarded our emissions reduction roadmap a Gold Standard

Pathway designation for the second consecutive year,

signaling the validity of our environmental stewardship

model and transparency thereof.

2023 was another successful year in many respects, but we

will not stop there as we have much more we want, and

need, to do to bolster our long-term sustainability. We will

remain focused on environmental stewardship (PLANET) as

well as meaningful and effective employee and community

engagement (PEOPLE), delivered with an intentional

adherence to a strong foundation of good governance

(PRINCIPLES).

The best is yet to come!

Teresa B. Odom

Senior Vice President - Sustainability

March 19, 2024

Additional information on our climate, environmental, safety and

social performance will be available in our separate sustainability

communications on our website at www.div.energy.


36	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Our Strategy Supports Sustainability

Our sustainability strategy is centered around prudent risk management,

asset integrity, employee safety, environmental protection, and emissions

reduction. From the wellhead to the boardroom, we are committed to our

role as responsible stewards of the natural resources we manage, the

people we employ and the environment in which we operate. We strive to

adhere to quality operating standards with a strong focus on the

environment, the health and safety of employees and positive

engagement with our local communities.

We believe our efforts to connect the meaningful and differentiated

attributes associated with our natural gas will increasingly be recognized

by the market as value is progressively placed on highly responsible

operators of natural gas assets. We are committed to addressing key

climate and environmental issues for our PLANET and likewise relevant

social issues for the PEOPLE across our operations, and doing so with a

constant focus on the values and PRINCIPLES under which we were

founded and continue to operate.

Commitment to Leadership and Transparency

Responsible stewardship and sustainability go hand-in-hand

and are at the core of our operations. Through sustainability

leadership and our unique business model, we

systematically strengthen our performance and execute on

our sustainability plans and commitments. We work

diligently to foster a culture of stewardship and

transparency, and a key aspect of our approach is to seek

stakeholder input while also keeping them apprised of

progress against our sustainability ambitions.

In 2023, we updated our periodic, formal multi-stakeholder

materiality assessment, utilizing our prior materiality

assessment, stakeholder outreach and peer benchmarking

to identify 29 relevant topics spread among eight key

clusters that include health and safety, climate change,

environmental management, resource management,

socio-economic value creation, our employees, suppliers

and partners, and risks and compliance.

We engaged both internal stakeholders such as Board

members and employees at all levels and locations as well

as external stakeholders across our value chain such as

equity and debt investors, financial service providers, trade

associations, customers, contractors and suppliers. The

assessment was conducted via a third-party, anonymous

online survey and the results were then compiled for

distribution and review by management and the

Sustainability & Safety Committee.

Among the relevant topics, the survey reflected that eight

topics of the top ten shared highest materiality among both

internal and external stakeholders, including the following:

—Employee safety

—Driver safety

—Cybersecurity

—Legal compliance

—Accident prevention

—Ethical behavior

—Access to funding

—Incident management

Survey over survey, the protection and safety of employees

continues to be a top priority while cybersecurity and

related data protection protocols was the single largest

upward mover and is now a top five priority for internal

stakeholders and likewise a top ten priority for external

stakeholders. Safe and efficient asset retirement fell out of

the top five relevance for both internal and external

stakeholders, though remains a top ten priority for external

stakeholders. For external stakeholders, emissions control

and reductions also fell in relevance, settling among their

top 20 material topics. Importantly, all of these issues

should not be viewed in isolation as they are increasingly

interconnected and can often impact each other.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	37

Our Approach to Sustainability

Our approach to sustainability encompasses consideration

of our climate, environmental and social impacts as well as

our responsibility to conduct business in accordance with

the highest standards of governance. These topics remain

front of mind as we proudly accept the responsibility and

privilege to be part of the solution to the significant

challenges of our country’s energy, climate and economic

security. To that end,

—by providing a reliable supply of abundant domestic

energy from assets that have a significantly smaller

environmental footprint than newly drilled wells, we

support our nation’s energy security.

—by making investments and implementing measures to

reduce emissions at the facilities we acquire, producing

differentiated natural gas through our industry-

recognized emissions detection, measurement and

mitigation processes, and retiring orphan wells for

several states, we are part of the solution for

climate security.

—by providing an affordable and sustainable domestic

energy supply while also providing both direct and

indirect employment, paying mineral royalties, and

supporting tax revenues for the communities where we

operate, we are grateful to be contributing to our

country’s economic security.

LIFE-CYCLE STEWARDSHIP

With a unique business model that reflects growth through

acquisitions and an operating strategy that embodies

stewardship of our natural resources and the environment,

we understand the importance of a full, life-cycle focus on

the assets we manage. As such, we have established an

employee-driven, data-focused sustainability program

which integrates sustainability considerations and actions

throughout our assets’ life cycles, beginning with pre-

acquisition diligence screening and continuing until we

safely and permanently retire the acquired assets at the end

of their productive lives. These considerations are the very

heart of the operational priorities that collectively represent

our proven SAM program, which is designed to increase

efficiencies, reduce fugitive greenhouse gas (“GHG”)

emissions, and deliver improvements in production at

existing facilities.


38	Diversified Energy Company PLC Annual Report and Form 20-F 2023

SUPPORTING LONG-TERM SUSTAINABILITY

We view sustainability through the lens of creating

long-term sustainable value for our stakeholders while

ensuring our daily actions contribute to a sustainable

environment and planet for society at large. We

demonstrate this focus when we align our stewardship-

focused business model and OneDEC culture with our

commitment to continuously identify, improve and monitor

our sustainability actions, as evidenced through our setting

and tracking of relevant and measurable targets.

These targets include, in part, our previously disclosed

Scope 1 methane emissions intensity reductions of 30% and

50% by 2026 and 2030, respectively, as compared to our

2020 baseline. Ongoing human and financial capital

investments across our asset portfolio, aimed largely at

methane reduction through leak detection and repair

“(LDAR”) efforts and conversion of natural gas-driven

pneumatic devices to compressed air, contributed to a 33%

reduction in reported methane emissions intensity for

year-end 2023, as further discussed on page 56.

While this accomplishment achieves our 2030 reduction

target seven years earlier than anticipated, we continue to

seek opportunities to further reduce our methane footprint.

In light of forthcoming environmental regulations that may

add new source categories of reported emissions, we will

evaluate those regulations as we consider new interim

targets. Even so, our year-over-year focused efforts and

life-cycle stewardship actions will continue to play a vital

role in keeping us on track toward our stated goal of Scope

1 and 2 net zero absolute GHG emissions by 2040.

In addition to our own guiding values for sustainability

management, we also utilize the United Nations’

Sustainable Development Goals (“SDGs”), which call on

individuals, corporations and governments to work

together towards the ultimate, unified goal of creating a

better and more sustainable future for all citizens globally.

At Diversified, we challenge ourselves to consider these

topics and more when we effectuate our business model,

corporate strategy, sustainability commitments, daily

operations, and risk management practices. We believe our

OneDEC approach supports important contributions to the

SDGs illustrated below, and we’ve identified several other

SDGs to which our business model aligns yet also provides

added opportunities for us to make continuous

improvement and contribution.

Task Force on Climate-Related

Financial Disclosures (“TCFD”)

The report is consistent with the recommendations of the

TCFD, with the exception of Scope 3 emissions, as noted

below, and in line with the Financial Conduct Authority’s

Listing Rule 9.8.6 requirement. The report also reflects the

guidance provided in Section C of the TCFD Annex, entitled

“Guidance for All Sectors” and Section E of the TCFD

Annex, entitled “Supplemental Guidance for Non-Financial

Groups”, related to the Energy sector. We are in the

process of developing a Scope 3 inventory in line with

existing protocols and evolving market expectations and

aim to report Scope 3 emissions for the 2024 year end.

While we remain focused on emissions reductions where we

have the most control, and thus are making good progress

in decarbonizing our own operations, we recognize that the

GHG emissions associated with our value chain are

proportionately greater than non-energy producing

companies as our Scope 3 emissions are associated mostly

with the end-use of our products. Therefore, we seek to

identify GHG reduction opportunities from our upstream

and downstream supply chains. We also evaluate initiatives,

including renewable natural gas and carbon capture and

storage projects which, in the longer-term, would allow us

to mitigate or offset some or all of our Scope 1 and

2 GHG emissions.


	GOVERNANCE EMBEDDING SUSTAINABILITY ACROSS THE ORGANIZATION

Our Board of Directors (“Board” or “Directors”) continues

to take a hands-on approach to identifying, assessing and

managing climate-related risks and seeking new

commercial opportunities from an energy transition, such as

alternative uses for our wellbores. The processes by which

the Board does this are fully integrated into our Board

calendar and our governance procedures. Climate-related

topics were included in discussions at each of the six

regular Board meetings held throughout 2023.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	39

The Directors receive regular briefings at Board meetings

on applicable climate matters from the Executive team as

well as the Chair of the Sustainability & Safety Committee.

From time to time the Board also receives training or

briefings from external third-party experts on specific

topics. In 2023, Deloitte LLP delivered a board education

session on biodiversity and the upcoming Taskforce on

Nature-related Financial Disclosures (“TNFD”).

Key climate-related topics discussed by the Board

throughout 2023, included:

—Assessing progress on emission detection and

mitigation, including handheld fugitive surveys and

repair, pneumatic conversions, aerial LiDAR, and

compressor conversions;

—Reviewing output from the marginal abatement cost

curve ("MACC") and approving the Emissions Program

budget for 2023; and

—Ensuring proposed acquisitions are consistent with

emissions reduction targets and plans.

Using an internally developed acquisition emissions

screening tool, target assets are assessed for their methane

intensity in accordance with the Methane Intensity Protocol

developed by the Natural Gas Sustainability Initiative

(“NGSI"). This information is then used by the Board as one

metric to inform its acquisition decision-making. The NGSI

voluntary reporting protocol complements existing

regulatory reporting by providing a consistent, transparent

and comparable methodology for measuring and reporting

methane emissions throughout the natural gas supply chain.

Our Board Committees provide oversight of our climate-

related risks and opportunities although these

considerations are a primary focus of our Sustainability &

Safety Committee. The roles of the four Board Committees

are reflected in the climate-related governance framework

depicted below.

CLIMATE-RELATED GOVERNANCE FRAMEWORK - BOARD

MANAGEMENT’S ROLE IN ASSESSING & MANAGING

CLIMATE-RELATED RISKS & OPPORTUNITIES

Management remains abreast of climate-related issues

through (i) its knowledge of our industry, business

environment and ongoing operating activities, (ii) frequent

interactions with both internal and external stakeholders,

including senior leaders in the Group, state and national

regulators and investors, and (iii) engagement with

vendors, industry associations and benchmarking groups

where current trends and best practice operating standards

and emissions reductions solutions are shared.

Climate-related responsibilities are assigned to

management-level positions according to each individual’s

area of responsibility and contribution to our overall

corporate strategy.

Collectively, our executive team, including in part the CEO,

CFO, COO (formerly) and Executive Vice President-

Operations (presently), provide frequent climate-related

operational and financial updates to the Board at each

Board meeting and throughout the year via interim

communications. However, the CEO assumes ultimate

responsibility for delivery of the Group’s climate and energy

transition strategy, including management of climate-

related risks and opportunities.

Climate-related actions by management during the year

include, but are not limited to: ensuring annual budgets

include operating and expenses for climate initiatives;

considering the impacts of new or emerging climate-related

policy and regulatory development on the Group; aiding in

the design or advancement of emission reduction initiatives;

ensuring Board directives on climate are integrated into

appropriate compensation plans and monitoring progress

of the same; and considering the impact of potential

acquisitions on standalone and consolidated Group

emissions and decarbonization strategies.


40	Diversified Energy Company PLC Annual Report and Form 20-F 2023

THE CULTURAL SHIFT UNDERPINS OUR TRANSITION TO

NET ZERO

Environmental management and the energy transition are

deeply embedded into our company’s culture and actions,

as climate impact is recognized as a key strategic

consideration across multiple business functions. For

example, we have trained and equipped 100% of our well

tenders to become leak detection and repair technicians.

Finding and repairing leaks has always been a priority for

Diversified and is truly just a daily routine for our employees

as we seek to positively impact our climate while delivering

a lower-carbon energy solution to market. Furthermore, at

an operational level, we have optimized well tender routes

to increase efficiency and reduce driving time, therefore

reducing emissions. We also use lightweight, fuel-efficient,

well-maintained vehicles to drive down fuel consumption.

In addition to the aforementioned responsibilities of various

teams with regard to climate oversight and action, the

figure below provides a broader view of certain individual

company departments whose actions incorporate

climate considerations.

CLIMATE CULTURE DRIVES DAILY ACTIONS


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	41


	STRATEGY UNDERPINNED BY DE-METHANIZATION OF OUR GAS PRODUCTION

The reduction of methane emissions is at the heart of our

corporate strategy and underpins our pragmatic approach

to the ongoing decarbonization of our operations.

While our de-methanization activities are focused on the

decarbonization of our existing assets, we are also keen to

explore opportunities that will help us utilize our asset

portfolio, as well as our skills and competencies, beyond our

current business model.

OUR NET ZERO PATHWAY: OUTPERFORMING

OUR TARGETS

In line with our pragmatic approach, we set out our

emissions reduction targets aiming to reduce Scope 1

methane intensity by 30% by 2026 and 50% by 2030,

reaching net zero from Scope 1 and 2 absolute GHG

emissions by 2040. We also set out our net zero pathway

showing how we plan to achieve our targets, beginning

with a near-term focus on methane emissions, as

depicted below.

We have been resolute in our focus on reducing emissions

from our operations. We are delighted that our significant

efforts to date, largely through the deployment of state-of-

the-art technologies for methane detection and reduction

and the conversion of natural gas-driven pneumatic

devices, have yielded outstanding results, with our 2030

methane intensity reduction target being achieved in 2023,

seven years ahead of schedule and directly aiding our

overall goal toward net zero in 2040.

Even so, we will continue to progress our decarbonization

strategy, focusing primarily on additional methane emission

reductions in the near-term as we seek to unpack the

impact on our reported emissions from new EPA

regulations where future real emission reductions could be

offset by potential increases stemming from both recent

and forthcoming changes in regulatory reporting

requirements. We are committed to tackling those changes

and delivering tangible results with continued financial

investment and diligent execution to achieve our 2040 net

zero GHG goal.

We discuss our deployment of decarbonization

technologies in the Climate-related Risks and Opportunities

tables on the following pages.


42	Diversified Energy Company PLC Annual Report and Form 20-F 2023

CLIMATE-RELATED RISKS AND OPPORTUNITIES

In line with TCFD guidance, we consider climate-related

risks and opportunities that could have a material financial

impact on our business on a short-, medium- and long-term

basis. For this analysis, our considered timeframes are as

follows: short-term 2024 to 2026, medium-term 2027 to

2030, and long-term 2031 and beyond. The timeframes

align with our methane intensity reduction targets set for

2026 and 2030 while contributing to our net zero GHG

emissions goal in 2040.

The climate-related risks and opportunities presented

below were identified through workshops with executive

management, senior leaders, and third-party advisors as

well as through peer comparisons.

Climate-related risks have been grouped according to the

risk types suggested by the TCFD: Transition Risk

(including Market, Policy & Legal, Technology, and

Reputation) and Physical Risk (chronic and acute), while

climate-related opportunities are categorized as Resource

Efficiency, Energy Source, Products & Services,

and Markets.

The specific climate-related risks and opportunities

identified are set out in the following tables together with

the potential impacts they could have on our business, the

timeframes associated with each, and the progress being

made to mitigate or exploit them.

CLIMATE-RELATED RISKS


Risk	Potential Impact	Timeframe(a)			Risk Management Actions
Risk	Potential Impact	S	M	L	Risk Management Actions
MARKET
Changing global market sentiment as consumers transition away from fossil fuels will result in reduced natural gas & oil demand and impact the price outlook	—Negative impact on revenues and portfolio value —Reduced opportunities for acquiring commercially viable assets		•	•	—We conduct scenario analysis of portfolio impacts under a range of commodity price and demand outlooks to assess portfolio resiliency. —Our portfolio is heavily weighted towards gas, which is expected to remain more resilient than oil through the energy transition, particularly in North America. —Our low-cost production provides considerable resilience to lower commodity price environments. —Our robust hedging strategy provides financial assurance and protection against commodity price volatility in the short-, medium- and long-term. —Our compliance with OGMP Gold Standard Pathway will ensure we remain differentiated as a responsible gas producer, helping us sustain our competitive advantage through the decarbonization of our Scope 1 and 2 emissions. —We are pursuing other differentiated gas initiatives like TrustWell and other quantification-based efforts to market our lower gas intensity.


Increased cost of and more challenging or conditional access to capital	—Investors/lenders look to decrease their portfolio exposure to hydrocarbon assets —Capital available to Diversified may become more difficult to access, more costly, or come with additional climate-specific obligations	•	•	•	—We have committed to achieving Net Zero by 2040 from our Scope 1 and 2 emissions, aligning with mainstream lenders and investors in Western capital markets. —Our existing levels of fixed-rate debt and amortizing payments provide significant protection in the short/medium term. —We continue to pursue ESG-aligned asset-backed securitization (“ABS”) financing structures, where our achievement or out-performance of commitments to ambitious ESG KPIs attached to these ABS financings can improve borrowing rates and financing capacity. —Our hedging strategy provides short- to medium-term certainty and protection for cash flows available for reinvestment. —Our strategy of incremental M&A enables adaptation to changing market or financing conditions.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	43


Risk	Potential Impact	Timeframe(a)			Risk Management Actions
Risk	Potential Impact	S	M	L	Risk Management Actions
POLICY & LEGAL
Cost of carbon	—Implementation of some form of carbon cost or regulation in states where we operate could increase operating costs and make our natural gas less competitive vs. other forms of energy —Such policies could also accelerate pressure from investors and stakeholders to reduce emissions or improve energy efficiency, increasing our decarbonization costs		•	•	—Ongoing engagement in proactive, voluntary measurement of our Scope 1 emissions to ensure we fully understand potential portfolio liability. —We continue to engage in efforts to reduce emissions across our portfolio, such as leak detection and repair, pneumatics replacements, and compressor optimization. —We engage in cost-efficient operations and deploy SAM initiatives across our upstream and midstream portfolio. —We are engaging with third-party consultants to more fully develop our internal price of carbon metrics and strategy. —We include the evaluation of acquisition targets’ carbon footprints in our M&A process and final investment decisions. —Our evolving internal MACC analysis aided by field testing and/or small-scale pilot projects allows us to optimize the prioritization of identified emissions reduction projects.


Well retirement	—Acceleration of existing state well retirement commitments could significantly increase annual capital and operating costs —Underestimation of well retirement costs could significantly increase asset retirement obligation and future cash outlay for well retirement activities		•	•	—We actively engage with regulators regarding well retirement policies and activities. —We are committed to retiring wells ahead of state requirements (2023: 80 wells), including 201 Diversified-operated wells retired in 2023. —Our low-cost retirement capacity enables us to increase our own well-retirement targets, participate in state orphan well programs and carry out asset retirement for third parties. —Our extensive experience of well retirement, particularly in Appalachia, and our expanded retirement capabilities puts us in the best position to accurately forecast the future capital requirements for these activities. —Revenue streams from third-party asset retirements help to offset the cost of retiring our own wells. In addition, Diversified is exploring potential opportunities in alternative energy uses for wellbores (e.g. hydrogen production, carbon storage, mechanical battery storage).


44	Diversified Energy Company PLC Annual Report and Form 20-F 2023


Risk	Potential Impact	Timeframe(a)			Risk Management Actions
Risk	Potential Impact	S	M	L	Risk Management Actions
Litigation	—Potential litigation tied specifically to Diversified’s climate-related reporting (e.g. for misrepresentation) or actions could bring additional legal and reputational costs —Potential litigation around leaks or other sources of emissions (now or historical)	•	•	•	—We have focused, near-term efforts to achieve Scope 1 methane intensity reductions with a goal of net zero Scope 1 and 2 GHG emissions by 2040. —We expect continued development, funding, and execution of formal plans and projects will enable the achievement of emissions targets. —We continue to transparently report and communicate climate and emission reduction initiatives, keeping stakeholders abreast of such actions. —We actively engage with federal and U.S. state regulators, and consistently demonstrate our commitment to meet or exceed their requirements. —We maintain strong community support in our operating areas. —We are transitioning to an emissions intelligence software, Iconic Air, to track, report, and manage emissions, which will enable us to increase transparency, improve the integrity of our emissions measurements and therefore minimize potential litigation risk around leaks. —We work with independent consultants to verify our GHG accounting. —We engage an independent, third-party consultant to provide moderate Level II assurance for Scope 1 & 2 GHG emissions.


Current & emerging climate- related regulation and policy	—Increasing costs of doing business as a fossil fuel-focused company; regulatory fines for emission levels; regulatory constraints on hydrocarbon commerce —Mandates on and regulation of existing products and services	•	•	•	—We actively monitor U.S. and international climate- related regulations and frameworks and engage as applicable, including: IFRS S1 & S2, Transition Plan Taskforce, SEC Climate Disclosures and TNFD. —We have multiple emissions reduction activities in place aimed at reducing methane emissions and achieving our 2040 net zero goal. —We actively engage with industry associations to ensure we are using best practices in operating procedures and emissions reductions. —Our experience from the many voluntary efforts made to date to reduce our methane emissions positions us to manage any impact arising from the U.S. EPA OOOOb and OOOOc regulations and U.S. Inflation Reduction Act’s Methane Emissions Reduction Program.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	45


Risk	Potential Impact	Timeframe(a)			Risk Management Actions
Risk	Potential Impact	S	M	L	Risk Management Actions
TECHNOLOGY
Cost of GHG emissions detection and reduction technology	—Increased costs of required technology; possible cost upside if more mitigation than expected is required		•	•	—Our emissions detection and reduction plans are already well-advanced with short- and medium-term costs factored into budgets. —We continue to benefit from the successful use of aerial and handheld leak detection equipment and from continuous investment in our low-cost SAM program to repair and eliminate fugitive emissions. —We continue to invest in leading-edge emissions reduction technologies and to monitor new technology developments, including aerial LiDAR, compressor conversions, handheld emissions detection, and pneumatic conversions. —We piloted two emerging emission detection and quantification technologies in 2023. Both technologies are expected to substantially reduce the cost of emissions detection while providing emissions quantification and a digital twin. —To date, we’ve experienced lower-than-expected costs of compressed air applications for pneumatic controllers. Our internally developed solutions for pneumatics and level controllers are well below market prices. —We continue to demonstrate innovative actions to reduce emissions, including retrofitting/elimination of existing emitting equipment (e.g. pneumatic devices and compressors). —Throughout 2023, we have continued to build and maintain our emissions intelligence using Iconic Air carbon accounting software to track, report and manage emissions. Using Iconic Air will allow us to streamline emissions accounting and reporting and manage our emissions sources at the asset-level.


Substitution of natural gas and oil with lower-carbon forms of energy	—Faster acceleration and adoption/ substitution of alternative energy/ lower carbon solutions (i.e., electric vehicles, more efficient appliances) drives lower demand for natural gas and oil		•	•	—The scenario analysis shows that gas plays an important role throughout the Energy Transition even in the Net Zero scenario (accounting for 22% of global energy demand in 2040). —Our scenario analysis shows that even under low- carbon scenarios our portfolio is relatively resilient. Due to our low cost of production, we are able to maintain profitable operations across our portfolio even under low commodity price environments (see Portfolio Resilience section).


46	Diversified Energy Company PLC Annual Report and Form 20-F 2023


Risk	Potential Impact	Timeframe(a)			Risk Management Actions
Risk	Potential Impact	S	M	L	Risk Management Actions
REPUTATIONAL
Overall perception of fossil fuels/ energy sector	—Increased stakeholder pressure to accelerate emissions reduction projects could increase short-term costs and challenge profit margins —Changes in stakeholder/society expectations of Diversified’s role in the energy transition could impact company valuation or brand —Increasing challenge to attract and/or retain talent	•	•	•	—We are committed to transparency in emissions and climate risk reporting, and to our plan of achieving our climate-related targets. —We engage regularly with shareholders, regulators and other key stakeholders to ensure understanding of our climate strategy. —We include climate metrics in short- and long-term remuneration policies to incentivize ongoing improvement in climate actions. —We are continuing to explore longer-term opportunities in new revenue-generating low-carbon energy projects, for example through waste heat recovery. —Broad leadership engagement through multiple communication channels keeps our current employees abreast of business strategy and emissions reduction actions and results. —Our community engagement initiatives and talent acquisition programs, including scholarship and internship programs, facilitate broader awareness of the Company and its climate-related actions among potential employee candidates. —Our community tree planting programs, such as Diversified’s 10,000 tree replanting effort with West Virginia State University in 2023, support communities, provide carbon sequestration, and increase the company’s visibility and engagement with our future talent.


PHYSICAL
Acute – Changing weather patterns, including increased frequency and severity of extreme weather events such as extreme rainfall and hurricanes	—Increased risk of compromised infrastructure or forced abandonment of operations could cause loss of revenue and decrease portfolio value	•	•	•	—We have robust business continuity and crisis management plans in place, which were tested during the central Appalachia floods of 2022 and resulted in minimal business disruption. —We use 24-hour monitoring centers, enabling a more rapid response to weather-related disruptions.


Chronic – Persistent or constantly recurring weather patterns, including water stress and heat stress	—Increasingly challenging and potentially dangerous environmental and climate conditions could increase operating costs and risks		•	•	—Our business model inherently requires minimal water consumption in our operations. —We maintain appropriate levels of insurance to mitigate losses. —The geographic spread of our asset portfolio mitigates any large-scale disruption to production from individual weather events e.g., flooding. —Further details on our exposure to physical risks and our qualitative assessment of our portfolio’s vulnerability to identified hazards are described in a separate section below.

(a)Timeframes are defined as S - short (2024 to 2026), M - medium (2027 to 2030), and L - long (2031 and beyond).


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	47

CLIMATE-RELATED OPPORTUNITIES


		Timeframe(a)
Opportunity	Potential Impact	S	M	L	Steps and Progress
RESOURCE EFFICIENCY
Emissions monitoring and replacement of inefficient equipment	—Early detection of methane leaks reduces the loss of sales gas and associated revenues across the portfolio	•	•	•	—To reduce our GHG footprint, we continue to invest in remote leak detection, aerial surveillance, replacement of pneumatic devices, and inefficient compressors. —We actively track advances in emissions monitoring technologies and plan to take advantage of any suitable applications and technology cost reductions that evolve. —We continue to work on emissions intelligence digitalization and automation plans, supporting the connection of reported emissions data in the Iconic Air software to our MACC tool, to enhance the process of evaluating a broad scope of emissions reduction projects.


Lowering vehicle- derived carbon emissions through optimization and more efficient vehicles; waste management recycling	—Fuel and operating cost savings by using vehicles that are more efficient and have lower carbon emissions		•	•	—We utilize lighter weight, more fuel-efficient vehicles in our fleet replacement program, which could further expand in the future to include the use of longer-range electric vehicles. —We are exploring new technologies to allow remote operations at well sites thus reducing vehicle use and associated emissions. —We utilize optimized route mapping to create the most efficient well tender routes thereby reducing vehicle run time, maintenance, fuel consumption and vehicle emissions. —We work internally to identify opportunities to reduce our carbon footprint within our office environment, for example paper consumption and waste recycling.


ENERGY SOURCE
Increase use of renewable energy sources	—Replace natural gas with renewable energy sources to support operational power needs		•	•	—Diversified uses solar equipment and small wind turbines to provide auxiliary power at certain smaller or remote well sites and has been increasing the use of solar equipment in its pneumatic conversion projects. —38% of our sources for Scope 2 electrical usage in 2023 were zero carbon (including nuclear and renewables). An additional 33% results from lower-carbon energy sources (including natural gas) versus coal or petroleum products. —We are exploring new technologies to expand the use of renewable and alternative energy in operations, including waste heat recovery and solid oxide fuel cells. Additionally, we are exploring the use of wellbores for mechanical battery energy storage to aid in the energy transition by providing off-peak energy storage.


48	Diversified Energy Company PLC Annual Report and Form 20-F 2023


		Timeframe(a)
Opportunity	Potential Impact	S	M	L	Steps and Progress
PRODUCTS & SERVICES
Asset retirement capabilities for third parties	—Providing third-party asset retirement services as an additional revenue stream and advancing states’ resolution of orphan wells —Support regional well retirement compliance —Continue to build internal asset retirement capabilities	•	•	•	—Our expanded well retirement capability supports our regional leadership position in responsible asset retirement. —We see an opportunity to grow our retirement capacity further via our subsidiary Next LVL Energy, positioning Diversified to further support states’ efforts to eliminate orphan wells. —Potential for expanded services including the generation of voluntary and regulated carbon credits related to well retirement of orphan wells held by state governments. —Expanded plugging commitments increase return of well pads to original, natural conditions thus supporting natural reforestation and biodiversity initiatives in those areas.


Fuel cells and hydrogen applications	—Explore potential long-term revenue opportunities in blue hydrogen and/ or emissions reductions using fuel cells		•	•	—We continue to explore new opportunities in low- carbon technologies. —We are currently in the early stages of pursuing partnerships to evaluate potential of using existing midstream infrastructure for future hydrogen applications.


Carbon capture utilization and storage (CCUS)	—Explore the potential to provide carbon storage services to neighboring emitters —Potential to offset our Scope 1 & 2 emissions		•	•	—We are working with external partners to explore the potential of using our gas storage capacity for CCUS.


Solar	—Opportunities to lease land surface rights to third parties	•	•	•	—We are evaluating opportunities to expand surface rights leases to third parties for their development of solar power farms.


MARKETS
OGMP Gold Standard Recognition	—Recognition of our commitment to deliver responsibly produced gas to the market —Enables further differentiation of our produced natural gas versus competitors	•	•	•	—Achieving Gold Standard Pathway in both 2022 and 2023 positions us to offer responsibly produced gas in the marketplace to differentiate it from other natural gas production. —As a member of OGMP, Diversified is committed to disclosing actual methane emissions data aligned with the OGMP 2.0 framework, thus further increasing our level of transparency for the market’s consideration when seeking differentiated gas.

(a)Timeframes are defined as S - short (2024 to 2026), M - medium (2027 to 2030), and L - long (2031 and beyond).


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	49

EMBRACING ENERGY TRANSITION

TECHNOLOGIES MITIGATES RISKS AND

OPENS OPPORTUNITIES

MARGINAL ABATEMENT COST CURVE

(“MACC”) ANALYSIS

MACC is a tool that allows for the visualization of a portfolio

of projects that, when taken as a whole, provide

complementary choices for the most efficient reduction of

GHG emissions. Both the GHG emission reduction potential

and the associated abatement cost for each project are

identified within the MACC.

Anticipated emission reductions are estimated based on

source-specific emissions calculations or through direct

measurement. Total costs include direct costs for project

implementation and the value generated from the project,

including decreased product loss or reduced operating

costs. When estimated emission reduction costs and

benefits are combined in the MACC, emissions reduction

project ranking based on economic feasibility and potential

impact is realized.

We are utilizing our MACC analysis as a warehouse of

potential technologies identified through extensive research

and collaboration within the industry, where each

technology is at various stages of evaluation and

applicability. Of the first emphasis for us in the MACC was

natural gas-driven pneumatics, where we have now

identified multiple technologies and solutions that are

effective and promising for the elimination of methane

emissions from pneumatic controllers and pumps.

Before our use of the MACC, we began our pneumatic

controller emission reduction efforts two years ago,

targeting the highest emitting pads first. Now, with the

MACC’s capability to provide a conversion cost break point

of dollars per MT CO2e for a growing database of

alternative technologies, we can make more informed

decisions as to optimal locations and technologies for our

future conversion plans. Thus, going forward we currently

plan to employ customized solutions on a site-by-site basis

as informed by our MACC.

MACC CONSIDERATIONS IN EMISSIONS ABATEMENT (illustrative)

03_426107-1_stack_macc consideration.jpg

Diversified has achieved the OGMP 2.0 Gold Standard

Pathway for the second consecutive year. The OGMP 2.0 is

the only comprehensive measurement-based reporting

framework created to report methane emissions accurately

and transparently for the oil and gas industry. This award

recognizes our commitment to developing aggressive and

attainable multi-year plans to measure and reduce methane

emissions. Our team worked diligently to fulfil the

requirement throughout the year and continues to do so.

For our operated assets, Diversified has now achieved Level

4 on all but two of OGMP’s 10 categories, with only

methane slip and leak quantification data remaining to

address. As we look to close out these remaining two

categories for Level 4, we also continue to advance our

efforts to achieve Level 5 on all categories as per OGMP 2.0

Gold Standard expectations.

PHYSICAL RISK

We recognize that the physical risks of climate events can

impact our business. These risks have been incorporated

into our risk assessment through our Viability and Going

Concern assessment where we consider the impacts that

certain climate events may have on our production.

Physical climate risks are functions of hazard, exposure and

vulnerability and are therefore complex and frequently

multidimensional. They are related to tangible, physical

impacts of changes in climate and are considered either

acute or chronic. Acute physical risks are event-driven,

including weather events such as extreme rainfall, flooding,

droughts, or wildfires, whereas chronic risks refer to longer-

term shifts in climate patterns, such as rising temperatures

or rising sea levels.

HAZARD IDENTIFICATION

To identify key physical risks to our portfolio, we leveraged,

in part, data published by the American Communities

Project (“ACP”) which included physical risk projections

through 2040. The ACP climate risk analysis was

underpinned by data from Four Twenty Seven, an affiliate

of Moody’s specializing in physical climate risk. Pinkus, A.

(2021) “Mapping Climate Risks by County and Community”,

American Communities Project (accessed January 30,

2024). The 2040 data refers to IPCC’s RCP 8.5 scenario,

which assumes GHG emissions continue to grow

unmitigated, leading to a ‘hothouse world’ with an

estimated global average temperature rise of 4.3°C by

2100. This scenario implies no concerted effort is taken by

society to cut GHG emissions. In contrast, the International

Energy Administration’s (“IEA’s”) most conservative

scenario, STEPS, assumes the implementation of existing

policies, leading to a 2.5°C rise in temperatures by 2100.

Therefore, the scenario used in our assessment of the

impact of physical climate risks on our portfolio is more

extreme than any of the three scenarios used to test the

resilience of our portfolio against the climate-related

transition risks.


50	Diversified Energy Company PLC Annual Report and Form 20-F 2023

We focused on four key hazards that could impact Diversified’s portfolio: acute risks of extreme rainfall, hurricanes, chronic

risks of water stress, and heat stress. We carried out a qualitative assessment of our portfolio exposure to these hazards. The

impact of rising sea levels as addressed in the ACP report has not been analyzed, since we currently have no coastal or

offshore exposure.

IDENTIFIED HAZARDS IN THE STATES IN WHICH WE OPERATE*

*Includes high and extreme (red flag) risks only as per ACP data

Source: ACP, Diversified Energy

EXPOSURE ANALYSIS

Our upstream and midstream assets are considered

exposed if they are located in an area where a climate

hazard may occur. The degree of exposure is defined by the

intensity of that particular hazard, with the range of

exposure including no risk, low, medium, high, and extreme

risk (which corresponds to ACP’s ‘red flag’).

While our portfolio is located entirely U.S. onshore, our

exposure to suffering a significant financial loss from a

single extreme weather event is minimized due to the

dispersion of our production footprint over a large

geographical area covering nine states – Pennsylvania,

Ohio, West Virginia, Virginia, Kentucky, Tennessee,

Louisiana, Texas, and Oklahoma, with our headquarters

in Alabama.

We compared the locations of our current assets at the

county level to the same counties within the ACP analysis.

This enabled us to quickly assess the exposure of our

assets, and therefore production, to the projected 2040 risk

profile of those counties, as reflected below. We also

identified potential physical impacts associated with each

of the identified risks.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	51

OUR PROJECTED GEOGRAPHICAL EXPOSURE TO KEY PHYSICAL RISKS OF CLIMATE CHANGE IN 2040

Acute


Extreme Rainfall		Hurricanes


Potential impacts:		Potential impacts:
—Disruptions of operations due to flooding —Infrastructure damage	—Supply chain disruption —Increased operating costs —Impact on revenue	—Infrastructure damage due to extreme winds —Operational disruption from hurricanes	—Inland flooding —Increased operating costs —Impact on revenue

Chronic


Water Stress		Heat Stress


Potential impacts:		Potential impacts:
—Reduced community access to water —Infrastructure cost of fresh water supply	—Impact on supply chain —Increased operating costs —Impact on revenue	—Increased heat exposure is a health and safety risk for people —Decrease in work productivity —Infrastructure failure due to excess heat exceeding the design criteria (gas leaks)	—Additional energy needed for cooling —Increased operating costs —Impact on revenue

Source: ACP, Diversified Energy

Using the ACP’s county-based hothouse world scenario,

and when considering each of these four risks, we believe

that our current portfolio is most exposed to extreme

rainfall. That is, we estimate that approximately 84% of our

projected production could be exposed to extreme rainfall

in 2040, as shown in the following table. It is important to

note that ACP’s analysis is at the county level, whereas our

assets may be located in a specific portion of the county

which may bear a different risk level than that of the overall

county. Thus, we believe our exposure will be mitigated by

the specific location of our wells within the counties that

are exposed to extreme rainfall risk, for example. Further,

we estimate that less than 3% of our existing production is

located in a designated flood plain.


52	Diversified Energy Company PLC Annual Report and Form 20-F 2023

OUR PRODUCTION EXPOSURE TO KEY PHYSICAL RISKS


Physical Risk		% of Diversified’s Projected 2040 Production in High or Extreme Risk Areas
Acute Risk	Extreme Rainfall	84%
Acute Risk	Hurricanes	4%
Chronic Risk	Water Stress	22%
	Heat Stress	41%

VULNERABILITY ASSESSMENT

Our qualitative assessment of vulnerability addresses the

sensitivity of our operations to the respective hazard,

including actions taken to reduce or adapt to the hazard.

Acute Physical Risks

Extreme rainfall and associated risk of flooding represent

the highest risk to our assets in the Appalachian Basin in

2040, especially in Kentucky, Ohio, and West Virginia,

where our exposure to this risk is characterized as extreme.

Indeed, in July 2022, several central Appalachia states

within our footprint, including primarily Kentucky but also

Virginia and West Virginia to a lesser extent, experienced

devastating floods resulting in loss of life and extensive

damage to housing and public infrastructure within the

states. While the flooding also temporarily impacted our

operations, including compressor facilities, communications,

and pipelines, we were able to efficiently restore the

affected facilities to operations within approximately 10

days. This flooding event did not require the full

implementation of our formal Crisis Management and

Business Continuity plans, yet our teams were able to

professionally respond as a result of our preparation for

such events.

Hurricanes represent a moderate risk to our portfolio, with

only limited increased exposure in Texas and Louisiana,

where this risk is characterized as medium-to-high and is

largely a function of the states’ location on the U.S. Gulf

Coast where Atlantic Basin hurricanes have historically, in

part, impacted the coastline. In the last three years, since

we acquired our first Central Region assets in 2021, the

Texas and Louisiana coastlines have directly experienced

two out of a total of 22 recorded hurricanes in the Atlantic

Basin with no impact on our inland operations.

From a mitigation perspective, we aim for prevention rather

than response when it comes to physical impacts to our

business from any emergency, including those which may

be climate-related. This prevention starts with training our

employees to respond to potential emergencies such as

natural disasters, where all emergency response-related

processes exceed the needs of situations that may arise.

We are also prepared to be effective and expeditious in our

response to any emergency as a function of our separate,

formal Crisis Management and Business Continuity plans

which are reviewed at least twice annually by senior

leadership and which help to ensure the resilience of our

critical business functions and the safety of our employees

and other stakeholders in the case of significant business

disruption. The resilience of our systems is supported in

large part by our intentional, 100% cloud-based information

systems strategy which eliminates the physical risk

exposure of this aspect of our business.

Our Central Region acquisitions in 2021 and 2022 also

brought three district Integrated Operations Centers

(“IOCs”) into our portfolio, two in our upstream operations

and one in our midstream operations. These IOCs

complement our existing gas control center in West

Virginia which monitors the majority of our midstream

Appalachia assets. These 24-hour monitoring centers

facilitate streamlining the collection, standardization and

dissemination of timely, decision-useful data for both

normal operations and atypical events such as those

created by physical climate risks. The central management

of data through these remote monitoring centers leverages

our supervisory control and data acquisition (SCADA)

system and therefore affords a more rapid response to

weather-related disruptions.

Further, we consistently maintain appropriate levels of

hazard risk insurance coverage that mitigate potential

material financial losses from extreme weather events, such

as extreme rainfall, tornadoes, hurricanes, etc.

Chronic Physical Risks

Water stress is the most significant chronic physical risk

associated with our portfolio in 2040, particularly for our

assets in Texas and Oklahoma, where this risk is

categorized as high. Nevertheless, our business model is

focused on operating existing assets, rather than the

extensive drilling of new wells which requires significant

amounts of water for completion of the wells. To date, we

have not experienced an instance of water use limitations

or restrictions when fresh water has been needed for our

typical field and well operations or asset retirement

activities. Therefore, we do not anticipate any significant

disruptions to our operations from this risk categorization.

We do recognize, however, that the increased risk of

drought-like conditions can impact local communities and

ecosystems, lead to increased cost of freshwater supply

where we do intake water, and potentially affect our supply

chain. We expect to adapt to these conditions, especially

since we already operate in these areas which are subject

to strict environmental regulations. Our approach to water

management is to minimize freshwater use where possible,

particularly in potential water-scarce areas within our

operating footprint, as described in our Climate Policy and

Environmental, Health & Safety Policy.

In our Sustainability Report, we assess our current exposure

to water stress, as defined by the World Resources

Institute’s Aqueduct Water Risk Atlas. Even though our

current exposure to water stress risk primarily qualifies as

Low Overall Water Risk, we continue to apply a responsible

approach to water use, aimed at limiting freshwater use,

managing our produced water, and recycling and reusing

produced water as and where applicable.

Heat stress is likely to have a moderate-to-high impact on

our portfolio, with the highest exposure in Oklahoma,

Kentucky, West Virginia and Virginia. We consider heat

stress from two perspectives: (1) personnel and (2)

infrastructure. While we recognize that heat stress is a

health and safety risk for personnel and could lead to a

decrease in work productivity, we have programs and

processes currently in place to address this concern daily,

given the number of field personnel working outdoors and

the nature and volume of work that must occur outside as a

result of our asset portfolio. We also hold adequate levels

of insurance coverage for heat stress-related incidents that


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	53

may require medical attention. As the risk of heat stress

increases, we are confident that our current health and

safety procedures can be successfully adapted, as

applicable, to mitigate the impact of this chronic risk on

our operations.

Our Smarter Asset Management operations program helps

mitigate the potential impacts of heat stress on our

infrastructure. The program consists of ongoing, consistent

asset inspection and maintenance and remote monitoring.

This information allows for a rapid response to any

infrastructure or equipment failures that may occur due to

excessive heat.

PORTFOLIO RESILIENCE

Following TCFD guidance and to ensure comprehensive

business planning, we evaluate the resilience of our

portfolio under multiple future climate scenarios. Each

scenario includes assumptions about how the energy

transition may evolve, with differing commodity price

and demand outcomes, providing a range of outlooks

against which our portfolio is tested to evaluate and

determine resilience.

SCENARIO ANALYSIS

The three scenarios we selected to test our portfolio

climate resilience are:

(a)IEA’s Stated Policies Scenario (“STEPS”)

(b)IEA’s Announced Pledges Scenario (“APS”)

(c)Wood Mackenzie’s Accelerated Energy Transition 1.5-

degree pathway (“AET-1.5”), a global net zero by

2050 scenario

It should be noted that there are some differences in the

categorization of specific fuels in the Wood Mackenzie

versus the IEA’s scenarios. For example, in the Wood

Mackenzie AET-1.5 scenario, liquid biofuels are included

within oil whereas they are included with bioenergy in the

IEA scenarios.

TOTAL PRIMARY ENERGY SUPPLY AND CO2 EMISSIONS FOR EACH SCENARIO


AET -1.5		IEA APS(a)(c)		IEA STEPS(b)(c)
Total Primary Energy Supply (1018 J)	CO2 Emissions (GT)	Total Primary Energy Supply (1018 J)	CO2 Emissions (GT)	Total Primary Energy Supply (1018 J)	CO2 Emissions (GT)

(a)Based on IEA data from the Announced Pledges Scenario of the IEA (2023) World Energy Outlook, www.iea.org/weo

(b)Based on IEA data from the Stated Policies Scenario of the IEA (2023) World Energy Outlook, www.iea.org/

(c)Further detail on the IEA’s pricing methodology for the APS and STEPS scenarios can be found in the 2023 World Energy Outlook.

AET -1.5

This scenario represents the most aggressive energy

transition scenario we considered, consistent with limiting

global warming to 1.5°C, in line with the most ambitious

goals of the Paris Agreement. In AET-1.5, global energy

supply peaks in 2024 due to more aggressive policy action

and accelerated global decarbonization efforts, which result

in an increase in electrification and adoption of new-energy

technologies in place of hydrocarbons. Under this scenario,

oil demand peaks in 2024 and then declines, from ~100

million barrels of oil per day (“MMBO/d”) to ~30 MMBO/d in

2050. As a result, near-term oil prices fall rapidly, from

current levels to ~$52 per barrel (“/bbl”) in 2030 and then

continue to decline more gradually reaching ~$30/bbl by

2050. Under this scenario the global economy achieves net

zero carbon emissions by 2050, aligned with the IEA’s own

net zero scenario.

The forecasts for natural gas demand and prices under this

scenario are more nuanced due to the assumed role of

natural gas as a global transition fuel and the relatively

rapid decline of oil prices in the future. This position is

particularly apparent in the U.S. market where the resilience

of gas demand is supported through the development of

carbon capture and storage, which supports low carbon

power generation and heating for industrial process as well

as blue hydrogen and ammonia.

AET-1.5 sees global natural gas demand peaking in 2027

and then falling below 2023 levels by 2030, with a

continued decline forecast thereafter. U.S. natural gas

demand remains particularly robust out to 2040 with near-

term policy (i.e. Inflation Reduction Act) support for the

development of carbon capture and storage along with

sustained LNG exports. While overall global natural gas

demand declines from 2027, the rapid decline in global oil

prices has a dramatic impact on the availability of relatively


54	Diversified Energy Company PLC Annual Report and Form 20-F 2023

low-cost associated U.S. gas. Significant levels of

production from the liquids-rich plays in the U.S. (such as

the Permian) become sub-commercial thus cutting off

some of the country’s lowest-cost supplies. In order to

balance the market, higher cost non-associated gas is

required thus driving up the marginal cost of supply.

While U.S. natural gas demand does decline, this decline is

more than offset by the decline in supply from the liquids-

rich basins and thus the U.S. Henry Hub natural gas price is,

perhaps counter intuitively, forecast to increase

significantly in the period to 2032, from $2.61/million Btu

(“MMBtu”) in 2023 to $4.05/MMBtu by 2032. Thereafter,

prices continue to increase through the 2030s and 2040s,

albeit at a slower pace, reaching $4.80/MMBtu by 2050.

IEA APS

This scenario assumes that governments will meet, in full

and on time, the climate commitments they have made,

including their Nationally Determined Contributions and

longer-term net zero emissions targets. This scenario is not

designed to achieve a particular outcome and does not

result in a net-zero world by 2050.

Under APS, there is a pronounced decline in oil demand

driven by the implementation of policies aimed at reducing

oil consumption. Demand gradually declines from ~102

MMBO/d

in 2023 to ~93 MMBO/d in 2030, before an accelerated

decline to 55 MMBO/d by 2050. In conjunction, oil prices

see a similar decline, stabilizing at around $74/bbl in 2030

before declining to $60/bbl by 2050. Global natural gas

demand declines steadily, dropping about 40% from its

2021 peak by 2050. U.S. natural gas prices increase from

$2.61/MMBtu in 2023, reaching their plateau around $3.00/

MMBtu over the 2030s before declining to below $2.70/

MMBtu from 2040 onwards.

IEA STEPS

This scenario is the least ambitious energy transition

scenario used for our portfolio analysis and is designed to

provide a sense of the prevailing direction of energy system

progression, based on a detailed review of the current

policy landscape.

In this scenario, oil demand will grow in the near-term to

2030 to reach 102 MMBO/d. Demand then declines out to

2050, reaching 97 MMBO/d. Global natural gas supply

mirrors the growth pattern of oil, rising steadily to a gentle

peak level in 2030 that plateaus through 2050. U.S. natural

gas prices decline from $4.96/MMBtu in 2023 to $4.00/

MMBtu in 2030. From 2030, price begins to gradually

increase over the next two decade reaching $4.30/MMBtu

by 2050.

DEC’s BASE CASE PRICE SCENARIO

Diversified’s base case price forecasts, which are used for the calculations of net asset value and free cash flow, are based on

the NYMEX forward curves from 2024-2032 for Henry Hub (“HH”) and 2024-2029 for West Texas Intermediate (“WTI”) as of

December 31, 2023. The prices are kept flat in real terms thereafter.

Oil Comparison 2023 - WTI

U.S. Gas Price Comparison 2023

*Diversified Energy’s Henry Hub price is calculated based on 1030 BTU/standard cubic foot

PORTFOLIO IMPACT

We use the published price forecasts for oil and U.S. natural

gas from each scenario to assess the potential impact on

the value of our assets compared to our base case. It is

important to note, however, that this analysis considers

only our current assets. No account is taken of the impact

that future acquisitions or divestitures may have on our

future business value and cashflows.

The following table shows the impact of the three climate

scenarios relative to the base case for our current portfolio,

in terms of net asset value (“NAV”) change in percent

versus base case.

NAV CHANGE % vs. BASE CASE


Scenario	Portfolio Value Impact (NPV10)
STEPS	18%
APS	-24%
AET -1.5	7%

Our NAV change is positive under the Wood Mackenzie

AET-1.5 and IEA STEPS scenarios, driven by two

main factors.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	55

Firstly, both scenarios forecast robust U.S. gas prices out to

2050, at $4.30/MMBtu and $4.80/MMBtu for 2050 under

STEPS and AET-1.5, respectively. The results illustrate our

conservative approach to financial planning, with our Henry

Hub price forecast aligned with the AET 1.5 scenario out to

2030 and staying flat at around $3.50/MMBtu post-2030.

The higher positive NAV change under the STEPS scenario

can be attributed to much higher Henry Hub prices out to

2030 than in our Base Case, which when coupled with

Diversified's front-loaded production outlook, significantly

increases the value of assets. Production volumes between

2024 and 2035 account for over 60% of the total

production between from 2024 to 2048. During this

timeframe, natural gas prices are higher in the STEPS

scenario, averaging ~$4.30/MMBtu versus an average of

~$3.70/MMBtu under AET- 1.5.

Secondly, the strong price outlook is bolstered by our low

cost of production. As a result, we are able to maintain

profitable operations across our portfolio through to 2050.

Our analysis indicates that even in the most carbon

constrained scenario (Wood Mackenzie AET-1.5), our

production would remain resilient and profitable in the

short-, medium- and long-term. This conclusion is

supported by the analysis of related free cashflows,

depicted below, where even under the most aggressive

pricing outlook in AET-1.5, our free cashflow

remains positive.

Unless there are significant changes in the regulatory

environment in the near future, we do not expect to see a

significant financial impact of climate-related risks on our

near-term cash flows. Post-2030, our conservative

commodity price assumptions, used for Diversified’s

financial planning and acquisition and divestiture screening,

position us well to cope with the potential introduction of

carbon taxes in the U.S. or falling commodity prices.

CUMULATIVE UNLEVERED FREE CASH FLOWS UNDER

EACH SCENARIO vs BASE CASE

CARBON COSTS AND REDUCTIONS

In addition to the impacts of the three climate scenarios on

commodity prices, the scenarios also incorporate carbon

price outlooks required to achieve the highlighted primary

energy outcomes. While the IEA acknowledges that these

estimates should be interpreted with caution, the CO2

prices provide some context for the level of price that is

required to promote fuel switching and associated

investment decisions. To assess the impact that carbon

pricing may have on our business, we have utilized the

carbon price forecast for the U.S. for the IEA scenarios and

for developed economies in the Wood Mackenzie AET-1.5

scenario. We have evaluated the implications based of

these carbon prices on our net zero goal (Scope 1 and 2).

Under the APS scenario, carbon prices in the U.S. are

forecast to be $135/MT in 2030 and rise to $175/MT by

2040. STEPS does not incorporate a carbon cost in the U.S.

(at a country level) across the forecast period. The AET-1.5

scenario incorporates carbon prices of $96/MT as soon as

2026, thereafter increasing to $136/MT by 2030 and $173/

MT by 2040.

METHANE INTENSITY TARGETS

(MT CO2e/MMcfe)


	Carbon Prices ($/MT)
Scenario	2026	2030	2040
IEA STEPS	N/A	N/A	N/A
IEA APS	N/A	135	175
WM AET 1.5	96	136	173

In 2021 we announced our ambitions for near- and long-

term emissions reductions relative to our revised 2020

baseline, with short- and medium-term targets to reduce

Scope 1 methane emissions intensity by 30% by 2026 and

50% by 2030. Based on our revised IPCC 2020 baseline

methane intensity of 1.6 MT CO2e/MMcfe, our targets are

therefore 1.1 MT CO2e/MMcfe by 2026 and 0.8 MT CO2e/

MMcfe by 2030. In addition, we have a long-term goal to

achieve net zero Scope 1 and 2 GHG emissions by 2040.

Our revised IPCC 2020 baseline for CO2 emissions intensity

across both Scopes for 2020 was 2.1 MT CO2/MMcfe.

Using the carbon price assumptions used in each of the

climate scenarios, the potential financial impact associated

with our methane emissions intensity targets in 2030 would

be $0.11/Mcfe under APS and $0.11/Mcfe under AET-1.5. The

carbon cost per Mcfe is calculated using the carbon price

from each scenario and multiplying this by the methane

intensity target for each of the target years, i.e. 2026, 2030

and 2040. As we have already surpassed our 2030

methane reduction target in 2023, the potential financial

impact of our methane emissions will likely be lower than

the calculated value above as we continue to focus our

efforts on de-methanization of our operations. There would

be no cost to our business under STEPS as this scenario

does not incorporate a U.S. carbon price. These figures do

not account for any additional costs from emissions of CO₂.


56	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Although we have not yet set specific targets for reducing

the intensity of our CO₂ emissions, if for the purposes of

this analysis we assume that we can reduce these at the

same rate as the intensity of our methane emissions, we

would expect our total Scope 1 and 2 emissions intensity in

2030 to be 1.05 MT CO2e/MMcfe, implying a total potential

carbon cost in 2030 (covering CO₂ and methane) of just

over $0.14/Mcfe in both APS and AET-1.5 scenarios.

Alternatively, if we take a less optimistic view and assume

that our CO₂ emissions remain at 2020 levels until 2030,

then the total intensity of our emissions would be 1.3 MT

CO2e/MMcfe, implying a total carbon cost in 2030 of close

to $0.18/Mcfe.

We aim to reduce our absolute Scope 1 and 2 GHG

emissions in line to achieve net zero in line with our 2040

goal. We would expect this to reduce the overall carbon

cost to our business from these emissions even in the face

of rising carbon prices. However, we recognize that our

2040 net zero goal assumes that there will still be residual

emissions from our operations which will need to be offset

elsewhere and that we may therefore still incur a carbon

cost associated with those residual emissions. We plan to

build these considerations into our financial models as the

pathway for our emissions after 2030 and for carbon

pricing becomes clearer in the coming years.


	RISK MANAGEMENT IDENTIFYING, ASSESSING AND MANAGING CLIMATE-RELATED RISKS AND OPPORTUNITIES

We recognize that the transition to a lower-carbon future,

inclusive of both physical and transition risks, could have

significant implications for our corporate strategy and

could negatively impact our financial results due to lower

demand and lower prices for natural gas and oil. The size

and scope of market-related climate risks are assessed and

quantified through scenario analysis as detailed in the

Strategy section of this TCFD Report. Equally, we recognize

that physical risks, such as extreme rainfall, water stress,

and heat stress, related to climate variability, could impact

our operations. The Strategy section also shows details of

our qualitative analysis of the impact of specific acute and

chronic physical risks on our portfolio, including mitigation

and adaptation actions.

We also actively monitor our performance against our

peers and engage with industry organizations such as the

Natural Gas Sustainability Initiative (“NGSI”) and OGMP to

ensure that our approach to climate risk, particularly the

decarbonization of our operations, follows best practice, as

described elsewhere in this TCFD Report.

This section of the TCFD Report focuses on our risk

management processes, including how we identify, assess,

and manage climate-related risks.

Effective risk management and control is a key component

to the successful execution of our business strategy and

objectives. Under the oversight of the Board’s Audit & Risk

Committee, our Senior Leadership Team developed risk

management review processes which include the oversight

and monitoring of our risk control and mitigation efforts.

These risk management processes were developed to

minimize risks across our operations, support the

achievement of our strategic objectives, and create

sustainable value for our stakeholders.

As part of our ERM program, we seek to assess all potential

risks, including climate-related, affecting stakeholders and

the natural environment and to counteract and mitigate

such risks as effectively and expeditiously as possible. Our

company-wide risk management processes ensure risks are

appropriately identified, assessed, and managed.

RISK IDENTIFICATION

Within the program’s risk identification phase, we capture

potential and emerging risks that could arise as a result of a

change in circumstances or new developments impacting

our company. To identify climate-related risks, we rely on

discussions with business unit leaders across the

organization, the experience and expertise of our Board

members, third-party experts, and our knowledge of

current and emerging industry- or company-specific risks.

Through consistent, robust stakeholder engagement and

our periodic corporate Materiality Assessment with

stakeholders, we also have the opportunity to identify

issues with the greatest impact, whether through risks or

opportunities, on our business. In 2023, climate and climate

management was identified by our stakeholders as a top 25

issue for the Group.

Climate-related risks are classified in alignment with the

TCFD’s description of physical and transition risks, as

described in the Strategy section above.

RISK ASSESSMENT

We assess climate-related risks to our business by utilizing

a scorecard approach, alongside other risk categories

considering their (i) likelihood, (ii) potential impact, and (iii)

speed of impact. For each Principal Risk, we also develop a

list of mitigating activities and other opportunities that may

offset or minimize the risk. In our most recent risk

assessment, we identified Climate as a Principal Risk, and

further, as a Strategic Risk within Diversified’s risk universe

when considering the potential it has to also influence

several other Principal Risks including Corporate Strategy

and Acquisition Risk, Regulatory and Political Risk, and

Commodity Price Volatility Risk.

RISK MANAGEMENT

While we consider risk management the responsibility of all

employees and have empowered them to enhance our

processes and procedures as appropriate to mitigate risks,

a designated Risk Owner is primarily responsible for

implementing the identified mitigating controls and action

plans in order to remove or minimize the likelihood and

impact of the risk before it occurs. As more fully described

below, the Risk Owner also provides updates to Executive

and senior management and the Board, as applicable, on

mitigation efforts of the risk.

Integration of Risk Management Processes into the

Organization’s Overall Risk Management

As described in part in the Governance section of this TCFD

Report, the ownership structure for Climate Risk is shown

below and begins with the Board’s responsibility to ensure

that Climate Risk is ultimately addressed and mitigated

through the Group’s corporate strategy and business

model. Assuming oversight responsibility of Climate Risk on

behalf of the Board, the Sustainability & Safety Committee

monitors company performance on operational climate

mitigation activities and energy transition adaptation plans

by actively engaging with senior management on these

topics.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	57

At the risk level, each Principal Risk is assigned to a Risk

Owner, a member of senior management who identifies and

develops mitigating controls and future opportunities for

mitigation as part of the risk scorecard process. Throughout

the year, under the oversight of an Executive Risk Owner,

the Risk Owner is responsible for actively monitoring and

managing the risk and likewise periodically updating the

risk scorecard.

As part of our ERM program, the role of Risk Owner for

Climate Risk is assigned to the Senior Vice President-

Sustainability. This Risk Owner, other senior management

team members, the Executive Risk Owner, and the CEO

regularly engage in risk discussions across all areas of our

operations, ensuring climate-related risks are integrated

into the Group’s overall and ongoing risk management

considerations, processes and actions. This healthy dialogue

regarding risk creates a culture that highly regards risk

mitigation as a way to preserve and create value for our

stakeholders. As a standing invited guest to the

Sustainability & Safety Committee meetings of the Board,

the Climate Risk Owner also regularly shares the Group’s

actions and mitigating activities regarding Climate Risk.

As a company, we also monitor emerging energy transition

trends and shifting conditions in the energy industry –

ranging from new climate-related regulatory requirements

to global climate impacts – so we are prepared to respond

accordingly. Such a response may include policy or

procedural changes or additional resources or training to

mitigate the emerging risks.

CLIMATE RISK OWNERSHIP STRUCTURE

Additional details of our ERM framework and program are

set out within this Annual Report .

Looking ahead, in 2024, the broader ERM program that

includes Climate Risk will be facilitated by our Senior Vice

President of Accounting who, under the ongoing oversight

of the Audit & Risk Committee, will:

—Engage Executive Management for a full review and

consensus of the Tier I and Tier II risks within our

risk universe;

—Assess the impact of the risks to corporate strategy and

develop relevant KPIs;

—Ensure Risk Owners develop, monitor, manage, and

report risk mitigation activities and opportunities to

Executive Management; and

—Present a full summary of the risks, KPIs, mitigating

actions, and opportunities to the Board.


	METRICS & TARGETS Beating Our Emissions Targets on Our Path Towards Net Zero

FOCUS ON SCOPE 1 & 2 EMISSIONS

We have been resolute in our focus on reducing GHG

emissions from our operations throughout 2023 with a

particular focus on reducing methane intensity,

underpinned by our clearly defined targets, relative to the

2020 baseline:

—30% reduction in Scope 1 methane intensity by 2026;

—50% reduction in Scope 1 methane intensity by 2030; and

—Net Zero from Scope 1 and 2 GHG emissions by 2040.

Methane emissions have a magnified impact on climate

change due to their high global warming potential

compared to carbon dioxide, hence our focus on reducing

the methane intensity of our operations. The significant

progress we are making in achieving our targets is reflected

in the reported emissions table below, reflective of our


58	Diversified Energy Company PLC Annual Report and Form 20-F 2023

achievement in 2023 of a methane intensity of 0.8 MT

CO2e/MMcfe, a 50% reduction from our 2020 baseline and

the accomplishment of our 2030 target seven years ahead

of schedule. This is also reflected in year-over-year change

in the portion of Scope 1 methane emission as to total

Scope 1 emissions, or 27% at year-end 2023 versus 38% at

year-end 2022.

Nonetheless, our primary focus remains on continuing near-

term efforts to further reduce the methane intensity of our

operations. This desire is driven by our longer-term goal to

achieve net zero emissions though we move forward

cautiously, within a regulatory environment that is

continuing to evolve and has the potential to increase our

reported emissions with the addition of new requirements

and new source categories not previously reported. As

such, we intend to evaluate those regulations as we

consider new interim targets.

As previously shared, we plan to increase in the medium-

term our efforts to reduce the combustion-derived CO2 in

our operations through efficiency improvements, potential

electrification, and the potential broader use of

renewable energy.

After focusing on true reductions and/or eliminations of

GHG emissions, whether methane or CO2, we will then seek

to address residual operating emissions through the use of

credible offsets and the generation of voluntary and

regulated carbon credits. We believe that this approach

sets us on course for the achievement of our longer-term

goal of net zero Scope 1 and 2 GHG emissions by 2040.

ACTIVITY LEVELS FOR THE KEY STEPS TOWARDS NET ZERO

REPORTING GHG EMISSIONS

To monitor our progress towards achieving our GHG emissions reduction targets and ultimate net zero goal, we collect and

evaluate a comprehensive set of metrics that are material to our performance. These metrics, which include our absolute

Scope 1 and 2 GHG emissions broken down by type and source, are also included in the GHG Emissions table below. Scope 1

and 2 GHG emissions data were assured by ISOS Group Inc. (“ISOS”). ISOS provided a moderate Level II assurance in

accordance with the AccountAbility 1000 Assurance Standard.


GHG Emissions(a)	Unit	2023	2022	2021
Scope 1 Emissions:	thousand MT CO2e	1,561	1,820	1,631
Carbon Dioxide	thousand MT CO2	1,140	1,130	841
Methane(b)	thousand MT CO2e	420	686	790
Nitrous Oxide	thousand MT CO2e	1	4	1
% Methane	%	27	38	48
Scope 1 Methane Intensity	MT CO2e/MMcfe	0.8	1.2	1.5
Scope 1 Methane Intensity - NGSI(c)	%	0.11	0.21	0.28
Scope 1 Emissions Attributable to:(b)(d)
Flared Hydrocarbons	thousand MT CO2e	—	0	0
Other Combustion	thousand MT CO2e	1,178	1,173	870
Process Emissions	thousand MT CO2e	92	67	65
Other Vented Emissions	thousand MT CO2e	63	182	295
Fugitive Emissions	thousand MT CO2e	228	399	402
Scope 2 Emissions - Total Company(b)	thousand MT CO2e	61	59	3
Energy consumption	million kWh	134	128	7
Total Scope 1 and Scope 2(b)	thousand MT CO2e	1,622	1,879	1,634
Scope 1 and Scope 2 GHG Emissions Intensity(b)	MT CO2e/MMcfe	3.1	3.4	3.1


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	59


Air Quality(a)(e)	Unit	2023	2022	2021
Nitrogen Oxide (NOx, excluding N2O)	metric tons	21,520	21,546	16,126
Carbon Monoxide (CO)	metric tons	18,448	18,530	13,842
Sulfur Oxide (SOx)	metric tons	61	108	81
Volatile Organic Compounds (VOC)	metric tons	3,108	4,421	6,632
Particulate Matter (PM Total)	metric tons	137	140	105

Totals may not sum due to rounding.

(a)Emissions are reported under a modified Intergovernmental Panel on Climate Change (“IPCC”) report format for EU investors.

(b)Based on a 100-year global warming potential of 28 for methane, in line with IPCC’s Fifth Assessment Report.

(c)Using the Natural Gas Sustainability Initiative protocol, and to support direct comparability among the industry’s producers, represents

methane intensity using methane emissions from production assets only (therefore, excluding gathering & boosting facilities) divided by

gross natural gas production.

(d)Reflects Sustainability Accounting Standards Board categories for reporting Scope 1 GHG emissions (EM-EP-110a.2) in line with the Oil & Gas

– Exploration & Production Sustainability Accounting Standard (October 2018).

(e)2022 and 2021 were recast from previous disclosures to mirror like computations in 2023, inclusive of updated calculation assumptions and

new approved reporting protocols, thus improving year-over-year comparability.

Disclaimer: GHG emissions were calculated per IPCC reporting guidance, which permits best engineering estimates for certain emissions

categories, and which may vary from the prescriptive measures applied under U.S. EPA reporting standards. The source data used in these

calculations were accurate and complete, to the best of our knowledge, at the time they were gathered and compiled. If new data or corrections

to existing data are discovered, the Group may update emissions calculations as permitted and in accordance with industry standards and

expectations. Such updates will be included in future reporting and posted to our website at www.div.energy where such posts may take place

without notice.

We have continued to focus our efforts on the reduction of

methane emissions from our operations with significant

success reflected in achieving our 2030 target seven years

ahead of schedule. As the bulk of our methane emissions

are largely a function of fugitive emissions and natural gas-

driven pneumatics, we have continued to address these

areas. Throughout 2023, we built upon previous

achievements and continued to pursue aggressive leak

detection and repair initiatives, as discussed in our Strategy

review, combined with replacing natural gas-driven

pneumatic devices with compressed air. These activities

have resulted in a 39% year-over-year reduction in absolute

Scope 1 methane emissions to 420 thousand MT CO2e from

686 thousand MT CO2e in 2022. Our Scope 1 methane

intensity improved more than 30% year-over-year to 0.8 MT

CO2e/ MMcfe and contributes to a three-year cumulative

reduction in methane intensity of ~50%.

METHANE INTENSITY LEVELS (2020-2023) vs.

DEFINED TARGETS

Carbon dioxide emissions now account for 73% of our year-

end 2023 total Scope 1 emissions portfolio, an increase from

the prior year’s 62% of Scope 1 emissions though not

surprising given our near-term focus and success on

reducing methane emissions. Year-over-year absolute

Scope 1 CO2 emissions increased by approximately 10

thousand MT CO2 to 1,140 thousand MT CO2. A majority of

Diversified's CO2 emissions are generally attributable to

compressors and vehicle fuel. For 2023, this slight increase

in CO2 emissions was largely attributable to an increase in

liquid fuel emissions as a function of increased produced

water hauling associated with a Central Region acquisition

during the year and refined calculation methodologies.

Nitrous oxide remains an immaterial component of our

overall GHG emissions, totaling just one thousand MT CO2e

in 2023. Further, our location-based Scope 2 GHG emissions

remained largely unchanged year-over-year at ~61 thousand

MT CO2e. As such, the primary drivers of the net reduction

in total absolute Scope 1 and Scope 2 GHG emissions were

the aforementioned significant methane emission

reductions in fugitives and pneumatics, as reflected in the

14% decline from 1,879 thousand MT CO2e in 2022 to 1,622

thousand MT CO2e in 2023. With this reduction, our overall

Scope 1 and Scope 2 GHG emissions intensity declined 9%

from 3.4 MT CO2e/MMcfe in 2022 to 3.1 MT CO2e/MMcfe at

year-end 2023.


60	Diversified Energy Company PLC Annual Report and Form 20-F 2023

YEAR-OVER-YEAR CHANGE IN SCOPE 1 AND 2 EMISSIONS

WATER USAGE

Due to the geographic locations of our assets and the

nature of our business model aimed at acquiring and

operating existing wells rather than drilling new wells, we

do not consider water availability to be a material climate-

related risk for our company. Further, according to the

World Resources Institute’s Aqueduct Water Risk Atlas,

99% of Diversified’s operations are located in states

classified as Low Overall Water Risk areas, using the oil and

gas industry-specific weighting scheme which is most

relevant for our business. At present we have therefore not

set ourselves specific targets regarding water usage.

INCENTIVIZING EMISSIONS

REDUCTION PERFORMANCE

Our commitment to reducing our GHG emissions is

reflected in our executive compensation plans which

include sustainability and climate-related targets.

An ESG-related performance component was first assigned

to a portion of the Executive Directors’ short-term incentive

plan (“STIP”) in 2020. Since then, our Remuneration

Committee and the Board have increased the ESG-related

percentage from 10% to 30%. ESG-related metrics were

also added to Executive Directors’ long-term incentive plan

(“LTIP”) first in 2022 and continue presently through 2024.

For both the STIP and LTIP, a portion of those ESG-related

metrics are specifically climate-related targets tied to

tactical methods to achieve further methane emission

reductions in our journey toward net zero in 2040, and thus

these short- and long-term incentive compensation metrics

are also applicable to members of senior leadership who

play an active role in executing these tactical methods.


	2020	2021	2022	2023	2024
STIP	10%	25%	30%	30%	30%
LTIP	N/A	N/A	20%	20%	20%

CONCLUSION

We recognize that the energy transition is a challenging

and complex global issue. However, Diversified continues to

prioritize its ambitious goals of reducing the carbon

intensity of its operations. With sustainability deeply

embedded in every aspect of our organization, we remain

steadfast in integrating climate considerations into our

company culture and decision-making processes.

We have assessed the impact of transition and physical

climate risks on our portfolio. The size and scope of market-

related climate risks were assessed and quantified through

scenario analysis, showing the resilience of our portfolio

even in the Net Zero scenario. Our qualitative assessment

of physical risks, such as extreme rainfall, hurricanes, water

stress, and heat stress, showed we are well-positioned to

mitigate and adapt to these risks, even in a more extreme

‘hothouse world’ scenario, associated with a temperature

increase of 4.3°C by 2100.

Our pragmatic approach to emission reductions, with a

near- and mid-term focus on de-methanization of our

operations, has yielded outstanding results with our 2030

methane intensity reduction target being achieved seven

years ahead of schedule - though we will not slow in our

efforts to capture further emission reductions as we move

forward. Our mission to achieve our long-term target of net

zero in 2040 continues, emboldened by the achievements

we have already made in reducing the methane intensity of

our operations. As we work toward our net zero targets, we

are committed to keeping environmental stewardship at the

forefront of our strategic decision-making.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	61

Managing Our Footprint

Diversified’s commitment to environmental stewardship

is focused on our responsible management of the natural

resources located within the communities we serve, the

safe and permanent retirement of end-of-life assets, our

efficient use of water, and the protection of biodiversity.

Our efforts to manage our environmental footprint start

with Diversified employees, who leverage their expertise

alongside innovative and proven solutions to help

reduce any potential negative impacts resulting from

our operations.

In addition to the previous GHG emissions and air quality

data and accompanying discussion within our

aforementioned TCFD disclosures, below are a number of

environmentally-focused areas within our footprint that are

relevant to our 2023 actions.

WELL RETIREMENT

Through our wholly-owned subsidiary, Next LVL Energy,

Diversified is a leader in well retirement in Appalachia. Next

LVL retires not only end-of-life wells owned by Diversified,

but also wells owned by other oil and gas operators in

Appalachia and abandoned wells with no current owner

that are the responsibility of the state. Further, Next LVL

serves as manager of the federal orphan well retirement

programs in southern Ohio.

ACTUAL WELLS RETIRED


	DEC wells(a)		Total wells, including 3rd party(a)

(a)Inclusive of 14 and 21 Central Region wells retired during 2022

and 2023, respectively

We retired 201 Diversified wells in Appalachia in 2023,

exceeding our stated objective for the year and significantly

exceeding annual requirements as per our existing state

agreements. We also retired 21 Diversified owned wells in

our Central Region states, bringing total retired company

wells to 222 in 2023.

During the year, the Next LVL team directly retired or

managed the retirement of 182 third-party wells, including

148 state and federal orphan wells and 34 wells for other

third-party operators. When considering both Diversified

and third-party retirements, we plugged a total of 404

wells during the year.

In its first full year of operation under Diversified’s

ownership, Next LVL’s expanded retirement capabilities

now include 14 teams and 17 rigs, well positioning the Group

to remain one of Appalachia’s largest and most active asset

retirement companies. Responsibly retiring end-of-life

assets is an integral part of our environmental stewardship

strategy. Included in this strategy are a rig utilization

optimization program, or a streamlined workflow that

affords more efficient movement of vehicles and equipment

- thus reducing the plausibility of safety incidents while

simultaneously reducing vehicles emissions - and bespoke

well pad restoration and biodiversity protections while

retiring the wells and restoring the site.

WATER MANAGEMENT

Water is a finite and essential resource and thus,

responsible water withdrawal, use, and disposal is

important for our environmental performance. Our

operations are primarily located within areas that qualify as

Low Overall Water Risk, with only 1% located in areas that

have Low to Medium Overall Water Risk and none in areas

beyond Medium Risk, as assigned by the World Resources

Institute’s Aqueduct Water Risk Atlas. Even so, we apply

the same principles of operational efficiency and best

practice to our water use that we apply across our business,

with the goal to: (i) limit freshwater use, (ii) manage our

produced water, and (iii) expand recycling and reuse of

produced water.

Our differentiated business model significantly decreases

our reliance on water and therefore on freshwater

withdrawal, thus alleviating an environmental concern

material to many of our peers engaged in new

development. Given the location of our operations in low

water risk areas, no freshwater was withdrawn in high or

extremely high water stressed areas in 2023.

In 2023, we decreased our annual total water use to less

than one million barrels, or nearly 70% less than the prior

year, primarily as a result of decreased water consumption

for contracted drilling and hydraulic stimulation activities

for third parties during the year. Our own water

consumption is largely related to domestic use and various

well operations, including certain well treatments and asset

retirement activities. This decline in water consumption as

compared to our total gross production resulted in a

significant improvement in our year-over-year water

consumption intensity, as reflected below.

WATER CONSUMPTION INTENSITY(b)

(Bbl of Water per Boe Gross Production)

(b)To improve year-over-year comparability, 2021 and 2022

metrics were revised to reflect updated reporting assumptions

for domestic water use


62	Diversified Energy Company PLC Annual Report and Form 20-F 2023

The main waste associated with our operations is produced

water, a naturally occurring by-product from the

production of natural gas and oil. Therefore, most of our

efforts in water management focus on the handling and

disposal of produced water given the potential

environmental implications of the same. During 2023, our

produced water increased 34% year-over-year to 83

thousand barrels per day, due primarily to our increasing

presence in the Central Region through acquisition.

Our framework for managing produced water effluents

aims to first limit any environmental impacts and to

increase the safety of employees, contractors and

surrounding communities. Then, we focus on operational

efficiencies to reduce waste water, which may include

recycling and reuse efforts as well as seeking innovative

approaches or technologies which can evaporate water

from the production stream to reduce total produced

water or extract heavy elements from the produced water

to allow the now distilled water to be released into

water streams.

SPILL PREVENTION & MANAGEMENT

As an integral aspect of our environmental management

program, Diversified is committed to effectively preventing

spills across our operations. Our strategic approach to spill

prevention includes (i) maximizing the use of well-

maintained pipelines to transport produced liquids, (ii)

utilizing continuous monitoring and automated data

collection where applicable to inform our liquids decision-

making, and (iii) removing out of service or degraded

equipment which could inadvertently contribute to spills.

Our spill intensity rate improved 64% year-over-year largely

as a result of the creation and empowerment of a Spill

Prevention Focus Group in 2023 who developed and

effectuated a plan to better mitigate and manage spill

incidents, starting with a root cause analysis and action

process that included informed data collection and

increased training. Additional contributory actions included

prevention and mitigation awareness from our integrated

operations centers, the increased frequency of equipment

inspections and the use of sacrificial anodes to lower the

rate of naturally occurring corrosion in tanks.

SPILL INTENSITY

(Bbl of Spills per MBbl Gross Liquids Production)

BIODIVERSITY

At Diversified, we are committed to safeguarding nature

and conserving biodiversity and ecosystems. We prioritize

responsible stewardship of our leaseholds and assets, and

focus on (i) minimizing environmental disruption though

our “Avoid, Mitigate, Restore and Offset” approach, (ii)

protecting sensitive species, habitats, and waterways, and

(iii) enhancing biodiversity and ecosystems within our

operational footprint. We achieve this through strong

oversight, risk management and standardized procedures,

recognizing that biodiversity protection is central to our

sustainable operations.

As part of our zero net deforestation goal and biodiversity

commitment, our 2023 efforts included a wide spectrum of

ecosystem enhancement activities, starting with bespoke

well pad restoration following well retirements for both

Diversified and third parties. For our largest project in 2023,

we partnered with West Virginia State University and its

Extension Service, along with over 500 individual

volunteers, to enable the planting during the year of nearly

11,000 bare-root seedlings and containerized trees in

municipal parks, underserved neighborhoods, degraded

forests, university campuses, and more.

Separately, we maximized the use of existing rights of way to

avoid potential stream and wetlands impacts during pipeline

extension work and effectuated projects independently

identified and developed by our summer intern which

included building and installing woodpecker houses in

various locations within our West Virginia footprint.

Safety in Focus

‘Safety-No Compromises’ has been and will continue to be

our utmost daily operational priority. While safety is

inherently the primary functional responsibility of the EHS

team, we recognize that safety is every employee’s

responsibility and priority - no matter the employee’s

location, position or job function. We recognize that

comprehensive and effective management practices

underpin the safety of our employees.

We take a data-driven approach to safety that includes an

electronic dashboard which contains key EHS metrics and is

readily accessible by all employees at any time. Thus, our

approach to safety training for our employees is both

preventative and responsive, utilizing the current and

historical results and trends from this dashboard -

partnered with amnesty-based Good Catch/Near Miss

reporting, computer-based and fit-for-purpose training, and

root cause analysis - to drive our safety training practices

and protocol as we work diligently to uphold a zero-harm

working environment.

PERSONAL SAFETY

While we take this approach to keep safety top of mind for

employees while on the job and despite an 84% increase in

Good Catch/Near Miss reporting, 2023 was a challenging year

for personal safety performance. We recorded a Total

Recordable Incident Rate (“TRIR”) of 1.28, up 75% from the

0.73 recorded in 2022 and higher than our 2023 target of 1.03.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	63

This year’s incident rate was driven primarily by an increase

in the total number of incidents, which were attributable in

part to short service employees with less than one year of

service under Diversified’s safety culture, which we are

seeking to address through our safety programs.

As with any incident and no matter the severity, our desire

for a zero harm working environment and our data-driven

approach to change management encourage us to (i) take

appropriate time to review the circumstances, causes and

corrective actions of these incidents and (ii) use these

results as a catalyst for improving forward

safety performance.

Our lessons learned to date in the review of our 2023

incidents reinforce what we already know - the task of

promoting safety is never finished - and highlight where our

safety program needs improvement, specifically in our

accountability and corrective action following an incident.

We have created a more robust work-flow for

accountability for safety incidents and formed a task force

to evaluate causal factors. So far, we have identified

opportunities for increased instruction for front line and

mid-level managers. and we will utilize the efforts of our

task force to drive additional, appropriate

program improvements.

Moving forward in 2024, while we will continue to promote

our Good Catch/Near Miss amnesty reporting program, we

are also updating our personal safety metrics to include

both TRIR and a severity rate, as measured by Lost Time

Incident rate, to provide enhanced clarity to our

safety performance.

TRIR

Per 200,000 work hours

DRIVER SAFETY

Our field operations span across nine states, and this

geographic dispersion means employees may spend

significant time traveling on the roads, as evidenced by the

more than 24 million miles driven during the year. For this

reason, improving driver safety means reducing both miles

driven, which we accomplish in part through our remote

monitoring programs and efficient well tender routing, and

the accidents that occur during those miles. We seek zero

preventable motor vehicle accidents (“MVA”) during the

calendar year, and aim to incentivize accident-free driving

by offering our field teams annual safe driving awards and

leveraging our MVA metric in a portion of executive and

senior leadership short-term compensation.

Our 2023 MVA is 0.55 incidents per million miles driven, a

20% improvement from the 0.69 recorded in 2022.

VEHICLE SAFETY

Vehicle Incidents (“MVA”)


		MVA	—	Miles Driven

PIPELINE AND PROCESS SAFETY

We operate a full complement of natural gas production,

gathering, transmission, and storage assets, including

thousands of miles of pipeline. To keep employees, our

communities, and the environment safe and protected, we

deploy rigorous monitoring and safety measures, engage in

regular maintenance, focus on operator training, maintain

well-documented operational and safety records, and utilize

state of the art technologies to aerially survey our systems.

Reflective of our commitment to asset integrity

management, during 2023 we were audited by 16 various

state and federal regulatory agencies and received zero

non-compliance citations with civil penalties for our

operational assets and compliance programs.


64	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Our Employees

We are committed to building a workplace that seeks to

attract and retain a talented and diverse staff by providing

attractive jobs with competitive salaries and meaningful

benefits, fostering a unified company culture, offering

equitable growth and development opportunities, and

creating a collaborative and enjoyable work environment

where all employees feel valued and supported in the work

they do.

Though our various operations encompass distinct

activities, we view our corporate and individual employee

actions through the lens of a single, unified OneDEC

approach that drives a culture of operational excellence

fostered through the integration of people and the

standardization of processes and systems. This OneDEC

approach supports and encourages company-wide

initiatives by ensuring alignment of our corporate and

sustainability goals with individual or collaborative action

supported by financial investment and well understood

principles and policies.

Regarding these principles and polices, during the year we

refreshed our Employee Relations Policy which defines

Diversified’s role in prioritizing employee well-being while

promoting an equal opportunity work environment. We also

updated our Employee Handbook to include new policies

and programs that offer additional opportunities and

benefits for employees. Finally, we developed a new

employee-specific Code of Business Conduct & Ethics

which serves as a framework for ethical decision-making,

helps ensure that all employees understand the

expectations and consequences of their actions, and

creates a safe, respectful and professional work

environment for all employees.

EMPLOYEE ENGAGEMENT

During the year, we capitalized on various opportunities to

promote employee engagement with members of

management and the Board. For example, executive

management held town hall meetings and in-the-field

interactions with employee groups, providing a platform for

the employees to receive direct updates on corporate

initiatives and developments and to ask questions directly

of executive and senior management. The Board’s Non-

Executive Director Employee Representative, Ms. Sandra

(Sandy) Stash, accompanied our Board Chairman in the fall

of 2023 on an asset and employee field visit in Texas,

meeting with employees to ensure the views of the

workforce are considered by the Directors. The Employee

Representative role was established in compliance with the

UK Corporate Governance Code, and 2023 was the third

full year of Ms. Stash’s tenure in this regard.

The valuable feedback from these meetings, along with that

resulting from our corporate-wide Employee Experience

Survey, is used to strengthen future employee engagement

and initiatives. We also regularly conduct new hire surveys

regarding the onboarding process as well as exit

interviews, both important tools to further improve

employee experiences.

In line with industry standards in the country of employment,

our employees maintain a range of relationships with union

groups. We have not previously experienced labor-related

work stoppages or strikes and believe that our relations with

our employees are satisfactory.

WORKFORCE DIVERSITY

The vast majority of our employee base at December 31,

2023 consists of production employees which includes

our upstream, midstream, and asset retirement field

personnel. All other employee positions, including back

office, administrative and executive positions, comprise

production support roles. Since inception of the Group, and

in alignment with our U.S.-based assets, all employees are

located in the U.S.

At Diversified, 11% of our total workforce at year-end was

made up of females (as self-reported), slightly higher than

the prior year-end and, in part, a function of our hiring

practices in 2023 where we hired female candidates at a

higher rate than female applications received (17% versus

14%, respectively, as self-reported). Ethnically diverse hiring

continues to be a focus. Our applicant data reflects that we

often have the least minority applicants per available job

opening in areas where we have some of the most available

openings. Likewise, we see a large number of minority

applications in a few areas where we have the least number

of annual openings. As always, we seek to enhance the

diversity of our employee base, ensuring our local

workforce mirrors the local population diversity, while also

striving to hire the best candidate for the position,

regardless of diversity characteristic.

At December 31, 2023, Senior Management, including the

executive committee and direct reports and excluding the

Executive Director, consisted of 103 employees, including

35 females (34%) and 68 males (66%).

At Diversified, we are dedicated to actively fostering an

environment of welcoming and belonging throughout all

facets of our business while demonstrating our company

principle to “value the dignity and worth of all individuals.”

Therefore, we utilize our talent acquisition team to seek and

develop programs and opportunities that allow us to

increase our diversity when hiring.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	65


2023 PRODUCTION EMPLOYEES	2023 PRODUCTION SUPPORT EMPLOYEES



2022 PRODUCTION EMPLOYEES	2022 PRODUCTION SUPPORT EMPLOYEES

TRAINING & DEVELOPMENT

We are committed to building a workplace that fosters

equitable growth opportunities and encourages human

capital and career development for all employees. We offer

several development programs and trainings to promote

the professional growth of employees, including our

existing Educational Assistance Program that offers tuition

reimbursement for advanced training in an employee’s field

of focus or a field that facilitates promotion opportunities.

In 2023, the Group also piloted a new Leadership Impact

Training (“LIT”) program for 40 managers across the

organization. The LIT is a Franklin Covey facilitated program

which includes a 360° feedback assessment that will drive a

personalized leadership development program for each

participant to better prepare participants for expanded

future leadership roles at Diversified. Based on overwhelming

positive feedback on the program, the Group intends to

continue this leadership program in 2024 and to introduce a

new LinkedIn Learning development program for

approximately 500 employees which also includes

personalized professional development curriculums.

TALENT ACQUISITION & RETENTION

Attracting and retaining talented and diverse staff is key to

our success as a business, and we remain focused on

providing attractive jobs with competitive salaries.

including hiring locally to build our long-term pipeline of

talent. In 2023, most of our new hires were from the local

communities in which we operate. Our commitment to local

hiring is indicative of our larger dedication to supporting

economic development in the areas in which we work.

Further, our commitment to hiring a diverse workforce was

bolstered this year with three unconscious bias training

programs undertaken by 350+ managers and leaders to

help them recognize potential bias present during the

interview, recruiting and promotion processes.

In addition to providing development programs and

trainings to promote career development for existing

employees, our hiring efforts also include utilizing our

summer internship and scholarship programs as a potential

employment pipeline for diverse candidates. We were

pleased to expand our internship program this year to

include 18 interns, surpassing our 2023 goal of hiring 15

interns. These interns included 15 traditional summer interns

who worked in various departments within the Group while

the other three interns were part of a local community

college’s workforce development initiative that allows

students to take technical courses toward a degree while

gaining paid work experience in their field of study.

Our total corporate turnover rate in 2023 was 17.1%, a slight

decrease over the prior year’s turnover of 17.6%.


66	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Our Communities

SOCIO-ECONOMIC IMPACT

Diversified assumes a vital role in supporting communities

across our 10-state operational footprint. By providing our

communities with employment opportunities underpinned

by competitive salaries and excellent benefits, state and

local tax revenues, royalty payments, and other direct and

indirect investments, we contribute significantly to the

economies of these states and, in doing so, positively

impact the communities where we operate.

Since 2021, we have commissioned an independent third-

party to conduct an analysis on the collective direct and

indirect economic impact we have across our 10-state

footprint. The analysis leverages financial and other data

from across our operations to assess the net impact we

have at the local, state and national level, and allows us to

illustrate the value of our contributions to stakeholders and

other interested parties. In the last year alone, for example,

we have contributed more than one billion dollars to the

U.S. GDP when considering both the direct and ancillary

impacts of our operations.

For example, in calendar year 2023, we provided more than

$500 million in ancillary labor income and generated more

than 6,300 ancillary jobs. These ancillary jobs, when

coupled with the ~1,600 employees we had at year-end

2023, highlight Diversified’s total employment impact of

nearly 8,000 jobs during the year. Year-over-year

operational expenditures across our footprint also

increased, but more substantially in states like Texas where

we grew through acquisition in 2023, therefore leading to

significant increases in economic benefit through job

creation within that state.

Beyond these economic benefits, employees across our

states continue to contribute to their communities through

volunteerism and donations, and Diversified is committed

to supporting these efforts.

COMMUNITY OUTREACH AND ENGAGEMENT

We are privileged to live and work in the 10 states across

our operational footprint. We believe with that privilege

and social license to operate comes a responsibility to

support those very communities in which we live and work,

and we recognize the long-lasting positive impact we can

have on both our communities and our business by

giving back.

Through our Community Giving and Engagement program,

we support organizations that have a positive, direct

impact on our communities. During 2023, through our grant

program and other corporate initiatives, we contributed

$2.1 million to more than 120 different charitable, education

related, and community and stakeholder engagement and

outreach organizations, including significant contributions

in geographic regions with large percentages of diverse

and/or socio-economically disadvantaged populations. Our

program is established around three main focus areas and

with the ultimate goal to support community initiatives that

fall under one or more of these areas: (1) community

enrichment, (2) education and workforce development and

(3) the environment. During 2023, our financial and human

capital supported organizations that included childhood

education, with emphasis on STEM (science, technology,

engineering and math), secondary and higher education,

children and adult physical and mental health and wellness,

environmental stewardship and biodiversity, fine arts for

children, food banks and meal programs, military and

veteran support groups, community and volunteer first

responders, and local infrastructure.

In addition to supporting employee volunteerism with these

and other deserving organizations, in 2023 we officially

launched the dollar-to-dollar matching gift program,

providing a company match on employee contributions up

to $1,500 per employee per year, where we matched

nearly $100 thousand in donations from employees during

the year.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	67

Section 172 Companies Act Statement

In compliance with sections 172

(‘Section 172”) and 414CZA of the UK

Companies Act, the Board makes the

following statement in relation to the year

ended December 31, 2023:

Our stakeholders are the many individuals and

organizations that are affected by our operations and with

whom we seek to proactively and positively engage on a

regular basis. We strive to maintain productive, mutually

beneficial relationships with each stakeholder group by

treating all stakeholders with fairness and respect and by

providing timely and effective responses and information.

We maintain several communication methods that afford

two-way engagement with our stakeholder groups,

including personal contact via face-to-face or telephone

conversation, email exchange, company reports, press

releases, investor presentations or conference participation

and other company engagement.

As the owner and operator of long-life assets, we naturally

make decisions that consider the long-term success of

Diversified and value creation for our stakeholders.

Engaging with our stakeholders informs our decision-

making, including consideration of our long-term strategic

objectives and the activities that support these aims, such

as merger and acquisition diligence and the management of

climate risk.

The following table provides a summary of stakeholder

engagements from 2023.

OUR STAKEHOLDERS


	Employees	Action and Engagement Our CEO and other executive management periodically conduct town hall meetings and field visits to personally and directly engage employees and to provide opportunities for employees to have direct management engagement. Our Board’s Non-Executive Director Employee Representative, Sandra M. Stash, also periodically engages with the workforce to receive employee feedback on our business strategy, corporate culture and remuneration policies, and shares this feedback with the Board. The valuable feedback from these meetings, along with that resulting from our updated corporate-wide Employee Experience Survey, is used to strengthen future employee engagement and initiatives. We also regularly conduct new hire surveys regarding the onboarding process and exit interviews, both important tools to further improve employee experiences.
We know our employees are our greatest asset and therefore essential to our success and growth. We recognize the need for a skilled and committed workforce, with a diverse range of experience and perspectives, and we value that diversity and the contribution it affords. Key Areas of Focus —Incident management —Employee, driver and process safety —Diversity and equal opportunity —Employee development —Workplace culture


	Communities	Action and Engagement Through our formalized Community Giving and Engagement Program and other corporate initiatives, we provided approximately $2.1 million in financial support to numerous organizations, including adult and children’s health and well-being programs, local food banks, secondary and higher educational programs and initiatives, and municipal services throughout our 10-state footprint. We were especially pleased to support children’s initiatives which included purchasing and distributing, for the third consecutive year, more than 1,200 winter coats in the Central Region through Operation Warm, and participating in the U.S. Marine Corp Reserve Toys-for-Tots Christmas gift program. We also supported the purchase of back-to-school supplies for elementary classrooms across our footprint and separately collected and donated more than 4,200 books to local schools and libraries. Further, we supported U.S. veteran-focused programs that seek to promote mental health healing and wellness among combat-wounded veterans or those suffering with post-traumatic stress disorder.
We actively seek to support sustainable socio-economic development in the communities in which we live and work and aim to minimize any potential negative impacts from our operations. From personal and socio-economic investment to strategic academic and educational support, our employees engage and serve their local communities through effective partnerships that make a real difference. Key Areas of Focus —Incident management —Effective grievance mechanisms —Environmental protection —Socio-economic investment and outreach —Local hiring


68	Diversified Energy Company PLC Annual Report and Form 20-F 2023


	Land and Mineral Owners	Action and Engagement During the year, our employees responded to nearly 34 thousand inquiries from our land and mineral owners through our in-house call center and recorded ~800 personal visits with landowners. We also distributed approximately $237 million in royalty payments during 2023.
We seek to develop and maintain trusted relationships with our land and mineral owners with the recognition that these relationships are key to our business philosophy and ability to achieve our operational goals. Key Areas of Focus —Royalty payments —Incident management —Effective grievance mechanisms —Environmental protection


	Equity and Debt Investors	Action and Engagement We regularly provide financial, operational and other sustainability performance updates to our equity and debt investors. These updates may be in the form of investor relations presentations, press releases, website updates, or direct calls and meetings, inclusive of the CEO, CFO, COO, SVP-Investor Relations, SVP-Sustainability, SVP- EHS and/or Board Chairman, as applicable. The Annual General Meeting (“AGM”) also provides an opportunity for all shareholders to engage with the Board and Executive Management. Our increasing participation in energy conferences, industry events and non-deal roadshows has provided added opportunities for discussions with current and potential Credit Facility lenders and ABS investors particularly interested in our sustainability and emissions reductions strategies, activities and results. Reflective of that interest by ABS investors and our commitment to climate and operating targets, our recent ABS transactions, inclusive of our sustainability-linked Credit Facility, have included interest rate impacts tied to certain of these sustainability targets.
We actively engage with our capital market partners, financial institutions and rating agencies to support a full understanding of our business and progress against our strategic priorities. Key Areas of Focus —Emissions reductions —Climate risk and energy transition —Incident management —Risk management —Corporate Governance —Financial stability —Access to funding


	Governments and Regulators	Action and Engagement Executive and operational management engage with federal, state and local regulators to address legislative, regulatory and operational matters important to our business and our industry. With risk identification and protection of the local environment and biodiversity in mind, we proactively and fully engage all applicable regulatory agencies before commencing a project to ensure transparent dialogue during the completion and approval of applicable environmental assessments and related actions. We also proactively and transparently engage with regulatory agencies throughout the year to keep them appraised of our operational and well retirement activities and to provide objective and measurable progress indicators. Our Next LVL well retirement subsidiary supports company efforts to exceed annual state plugging requirements while also supporting the well retirement needs of other oil and gas operators in the Appalachia Basin as well as the states in their respective federal orphan well retirement programs.
We seek to develop and maintain positive relationships and regular dialogue with various stakeholder groups within our federal, state and local governments. Key Areas of Focus —Legal compliance —Tax payments to governments —Safe and efficient asset retirement —Emissions reductions —Risk management —Environmental protection


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	69


	Suppliers and Customers	Action and Engagement We use local suppliers and vendors in each of the states in which we conduct our operations. We engage the expertise and capability of a leading supply chain risk management firm to continuously screen and monitor contractor safety performance and compliance through stringent operating guidelines. With a network of approximately 700 suppliers, this real-time monitoring helps to ensure our suppliers are providing us with the necessary product and service quality to meet the expectations of our stakeholders and support ongoing agreements with those suppliers who satisfy our safety thresholds. We delivered 821 MMcfepd in 2023 with no cited process and pipeline safety events or associated civil penalties. We continue to use our pipeline awareness programs to provide relevant information and education to those who interact with our assets or employees.
Our production is essential to supporting modern life. We work hard to deliver environmentally-focused, responsibly produced natural gas, NGLs and oil that satisfy regulatory requirements and meet the energy demands of our local communities and customers while supporting our climate goals. We strive to develop strong relationships with our suppliers that are built on trust, transparency and quality products and services. Key Areas of Focus —Incident management —Process safety —Procurement management —Access to funding


	Joint Operating Partners	Action and Engagement We fulfill our responsibility as operator by responsibly managing the wells, ensuring payment of related expenses, and distributing applicable revenues and royalties from the wells’ commodity sales.
As operator, we work on behalf of our joint operating partners to safely and efficiently manage the assets and deliver our products. Key Areas of Focus —Access to funding —Risk management —Employee and process safety —Accident prevention


	Industry Associations	Action and Engagement Through our active participation and the sharing of operating best practices, technical knowledge and legislation updates, we believe that these associations add value to our business, support our industry at large and protect the interests of our stakeholders. Collaborative engagements in these associations provide us with a platform to help collectively advance the sector and industry as a whole. Our leadership’s participation in industry associations includes participation in national, regional and state associations in West Virginia, Virginia, Kentucky, Pennsylvania, Ohio, Oklahoma, Texas, and Louisiana. We are especially proud of employees’ involvement and leadership roles in organizations like the Women’s Energy Network of West Virginia which seeks to empower women across the energy value chain and the recognition of our efforts in receiving both the Industry Innovation award (for use of innovative technologies in emissions detection) and Individual Excellence award (for long- standing, proven leadership in the industry) as conveyed by the Virginia Department of Energy.
Recognizing the benefit of collective and collaborative efforts among industry peers, we are actively involved in leadership and other roles in industry associations within the states in which we operate. Key Areas of Focus —Incident management —Environmental protection —Risk management —Industry advocacy and leadership —Accident prevention —Employee and driver safety —Landowner engagement


70	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Non-Financial & Sustainability Information Statement

This section of the Strategic Report constitutes our Non-Financial & Sustainability Information Statement, produced to comply

with the Non-Financial & Sustainability Reporting Directive requirements from sections 414CA and 414CB of the UK Companies

Act 2006.

The table below sets out where relevant information can be found within this Annual Report & Form 20-F. Additional

information will be available in our Sustainability Report or on our website at www.div.energy. Our Policies can be found on

our website at www.div.energy.


Reporting Requirement	Policies	Reference within this Annual Report & Form 20-F	Page
Environmental Matters	Code of Business Conduct & Ethics	Retire Assets Safely and Responsibly and Restore the Environment to its Natural State	18
	EHS
	Climate	Our Approach to Sustainability	38
	Business Partners	TCFD	39
	Biodiversity	Managing Our Footprint	62
		Our Communities	67
		Our Approach to Governance	126
Employees	Employee Relations	A Differentiated Business Model	10
	Anti-Bribery & Corruption	Our Approach to Sustainability	38
	Compliance Hotline & Whistleblowing	Our Employees	65
	Code of Business Conduct & Ethics	Our Approach to Governance	126
	Human Rights
	Securities Dealing
Human Rights	Code of Business Conduct & Ethics	A Differentiated Business Model	10
	Human Rights	Our Employees	65
	Modern Slavery	Our Approach to Governance	126
	Business Partners
Social Matters	Code of Business Conduct & Ethics	Our Strategy Supports Sustainability	37
	EHS	Our Approach to Sustainability	38
	Human Rights	TCFD	39
	Tax	Managing Our Footprint	62
		Our Employees	65
		Our Communities	67
		Our Approach to Governance	126
Anti-Corruption & Anti-Bribery	Anti-Bribery & Corruption	Our Approach to Sustainability	38
	Compliance Hotline & Whistleblowing	Our Approach to Governance	126
Business Model	Code of Business Conduct & Ethics	Business Model	14
		Strategy	14
		Our Approach to Governance	126
Principal Risks and Uncertainties	Compliance Hotline & Whistleblowing	Our Approach to Sustainability	38
	Compliance Hotline & Whistleblowing	Risk Management Framework	91
		Our Approach to Governance	126
Non-Financial KPIs	Code of Business Conduct & Ethics	Meet or Exceed State Asset Retirement Goals	21
	EHS	Meet or Exceed State Asset Retirement Goals
	Climate	Total Recordable Incident Rate	21
		Our Approach to Governance	126


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	71


Reporting Requirement	Reference within this Annual Report & Form 20-F	Page
Board oversight of climate-related risks and opportunities.	TCFD: Governance	39
Identifying, assessing and managing climate-related risks and opportunities.	TCFD: Governance TCFD: Risk Management	39 57
How processes for identifying, assessing and managing climate-related risks are integrated into the overall risk management process.	TCFD: Embedding Sustainability Across the Organization TCFD: Management’s Role in Assessing & Managing Climate-Related Risks & Opportunities TCFD: The Cultural Shift Underpins Our Transition to Net Zero TCFD: Risk Management	39 40 41 57
Principal climate-related risk and opportunities arising in connection with operations.	TCFD: Climate-Related Risks and Opportunities TCFD: Climate-Related Risks TCFD: Climate-Related Opportunities	43 43 48
Time periods by reference to which risks and opportunities are assessed.	TCFD: Climate-Related Risks and Opportunities TCFD: Climate-Related Risks TCFD: Climate-Related Opportunities	43 43 48
Actual and potential impacts of the principal climate- related risks and opportunities on the business model and strategy.	TCFD: Climate-Related Risks and Opportunities TCFD: Climate-Related Risks TCFD: Climate-Related Opportunities	43 43 48
Analysis of the resilience of the business model and strategy, taking into consideration different climate- related scenarios.	TCFD: Portfolio Resilience TCFD: Portfolio Impact	54 55
Targets used by the organization to manage climate- related risks and to realize climate-related opportunities and of performance against those targets.	TCFD: Our Net Zero Pathway: Outperforming Our Targets TCFD: Metrics & Targets	42 58
KPIs used to assess progress against targets used to manage climate-related risks and realize climate-related opportunities and of the calculations on which those KPIs are based.	TCFD: Reporting GHG Emissions TCFD: Incentivizing Emissions Reduction Performance	59 61


72	Diversified Energy Company PLC Annual Report and Form 20-F 2023

A Message from Our

Chief Financial Officer





			“
			I am very pleased to report that 2023 was an outstanding year for Diversified, with record financial results and solid operational performance from our assets.

Financial Review

Before penning my first CFO letter after many years, I took

a few moments to go back through all of Diversified’s

annual reports since going public in 2017. It was satisfying,

though not surprising, to see the common threads of our

firm's strategy and values woven through those pages-

reliable production, stable cash flows, durable margins and

consistent shareholder distributions. As I look ahead, I

intend to reinforce a disciplined financial approach to our

business that will provide flexibility and resiliency

throughout commodity price cycles. Additionally, we will be

diligent in expense management while looking to drive

further capital efficiency improvements through

the business.

I am very pleased to report that 2023 was an outstanding

year for Diversified, with record financial results and solid

operational performance from our assets. Adjusted EBITDA

was above expectations and reached a record level for the

Group. An improvement of approximately 3% in our total

per unit operating expense helped to deliver margins that

were approximately 50% or better for the sixth straight

year, with 2023 coming in at approximately 52%.

2023 began with an accretive acquisition in the Central

Region, allowing the opportunity to capture operational

synergies while increasing exposure to the premium Gulf

Coast markets pricing and the long-term demand pull from

the growth in LNG markets.

Additionally, we commenced trading on the New York

Stock Exchange (NYSE), an important strategic milestone

for the Company. The U.S. listing will enhance trading

liquidity and facilitate increased ownership from U.S.

domestic equity funds.

We ended the year with a highly successful transaction that

was both value-enhancing and deleveraging. This

approximately $192 million asset sale resulted in an

approximate 10% reduction in net debt.

Moreover, we have once again demonstrated that our

disciplined acquisition strategy allows us to be selective

and thoughtful in our approach but unwavering in our quest

to extract value when the opportunity affords itself.

You will find the full financial results of our operations on

the following pages, which I hope will be helpful as you

review our performance.

We expect 2024 to be a year of transition for both the

world and Diversified. Macroeconomic and geopolitical

developments remain a concern in the short term, with

limited visibility on how inflation, as well as other

disruptions, might impact energy prices, particularly natural

gas prices. We move into 2024 in a sound financial position,

with a focus on further reducing our debt, investing in

accretive acquisitions, and providing returns to our

shareholders. It is shaping up to be another exceptional

year for Diversified, one in which we will focus on playing

offense and being opportunistic, as we have historically

found this commodity price backdrop to provide a

tremendous opportunity to creatively grow our business

and ultimately create value for shareholders.

I want to thank our shareholders, debt holders, banks,

analysts, rating agencies, insurers, business partners, and

key advisors for their continued trust in Diversified and their

ongoing support to execute the proper measures to

strengthen our company and be in the best position to take

advantage of the opportunities we see ahead. I also want to

thank all of our dedicated, caring employees that are

focused on the safe production of American energy and are

also focused on continuing to deliver superb results for

their team members and our shareholders.

Bradley G. Gray

President & Chief Financial Officer

March 19, 2024


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	73

OPERATING RESULTS

Key Factors Affecting Our Performance

Our financial condition and results of operations have been,

and will continue to be, affected by a number of important

factors, including the following:

Strategic Acquisitions

We have made, and intend to continue to make, strategic

acquisitions to solidify our current market presence and

expand into new markets. We have made the following

business combinations or asset acquisitions for a total

aggregate consideration of $1.1 billion during the years

ended December 31, 2023, 2022 and 2021, comprised of:

—March 2023: The Tanos II Assets Acquisition, in which we

acquired certain upstream assets and related

infrastructure in the Central Region;

—September 2022: The ConocoPhillips Assets Acquisition,

in which we acquired certain upstream assets and related

gathering infrastructure in the Central Region;

—July 2022: Certain plugging infrastructure in the

Appalachian Region;

—May 2022: Certain plugging infrastructure in the

Appalachian Region;

—April 2022:

—The East Texas Assets Acquisition, in which we

acquired working interests in certain upstream assets

and related facilities within the Central Region from a

private seller, in conjunction with Oaktree;

—Certain midstream assets, inclusive of a processing

facility, in the Central Region that was contiguous to

our East Texas assets;

—February 2022: Certain plugging infrastructure in the

Appalachian Region;

—December 2021: The Tapstone Acquisition, where we

acquired working interests in certain upstream assets,

field infrastructure, equipment and facilities within the

Central Region in conjunction with Oaktree;

—August 2021: The Tanos Acquisition, in which we

acquired working interests in certain upstream assets

field infrastructure, equipment and facilities in the

Central Region in conjunction with Oaktree;

—July 2021: The Blackbeard Acquisition, in which we

acquired certain upstream assets and related gathering

infrastructure in the Central Region;

—May 2021: The Indigo Acquisition, in which we acquired

certain upstream assets and related gathering

infrastructure in the Central Region;

Our strategic acquisitions may affect the comparability of

our financial results with prior and subsequent periods. We

intend to continue to selectively pursue strategic

acquisitions to further strengthen our competitiveness. We

will evaluate and execute opportunities that complement

and scale our business, optimize our profitability, help us

expand into adjacent markets and add new capabilities to

our business. The integration of acquisitions also requires

dedication of substantial time and resources of

management, and we may never fully realize synergies and

other benefits that we expect.

Recent Developments

On March 19, 2024 we announced we entered into a

conditional agreement to acquire Oaktree’s proportionate

interest in the previously announced Indigo, Tanos III, East

Texas and Tapstone acquisitions for an estimated gross

purchase price of $410 million before customary purchase

price adjustments. The transaction is expected to be funded

through a combination of existing and expanded liquidity,

the assumption of Oaktree’s proportionate debt of

approximately $120 million associated with the ABS VI

amortizing note and approximately $90 million in deferred

cash payments to Oaktree. Additional liquidity for the

transaction may be generated from non-core asset sales

and the potential issuance of a private placement preferred

instrument.

Segment Reporting

We are an independent owner and operator of producing

natural gas and oil wells with properties located in the

states of Tennessee, Kentucky, Virginia, West Virginia, Ohio,

Pennsylvania, Oklahoma, Texas and Louisiana. Our strategy

is to acquire long-life producing assets, efficiently operate

those assets to maximize cash flow, and then to retire

assets safely and responsibly at the end of their useful life.

Our assets consist of natural gas and oil wells, pipelines and

a network of gathering lines and compression facilities that

are complementary to our core assets. We acquire and

manage these assets in a complementary fashion to

vertically integrate and improve margins rather than

managing them as separate operations. Accordingly, when

determining operating segments under IFRS 8, we

identified one operating segment that produces and

transports natural gas, NGLs and oil in the United States.

Refer to Note 2 in the Notes to the Group Financial

Statements for a description of our segment reporting.


74	Diversified Energy Company PLC Annual Report and Form 20-F 2023

RESULTS OF OPERATIONS

Please refer to the APMs section within this Annual Report & Form 20-F for information on how these metrics are calculated

and reconciled to IFRS measures. Discussion related to prior period results can be found in the Results of Operations section of

our 2022 Annual Report on our website at https://ir.div.energy/reports-announcements.


	Year Ended
	December 31, 2023	December 31, 2022	Change	% Change
Net production
Natural gas (MMcf)	256,378	255,597	781	—%
NGLs (MBbls)	5,832	5,200	632	12%
Oil (MBbls)	1,377	1,554	(177)	(11%)
Total production (MMcfe)	299,632	296,121	3,511	1%
Average daily production (MMcfepd)	821	811	10	1%
% Natural gas (Mcfe basis)	86%	86%
Average realized sales price (excluding impact of derivatives settled in cash)
Natural gas (Mcf)	$2.17	$6.04	$(3.87)	(64%)
NGLs (Bbls)	24.23	36.29	(12.06)	(33%)
Oil (Bbls)	75.46	89.85	(14.39)	(16%)
Total (Mcfe)	$2.68	$6.33	$(3.65)	(58%)
Average realized sales price (including impact of derivatives settled in cash)
Natural gas (Mcf)	$2.86	$2.98	$(0.12)	(4%)
NGLs (Bbls)	26.05	19.84	6.21	31%
Oil (Bbls)	68.44	72.00	(3.56)	(5%)
Total (Mcfe)	$3.27	$3.30	$(0.03)	(1%)
Revenue (in thousands)
Natural gas	$557,167	$1,544,658	$(987,491)	(64%)
NGLs	141,321	188,733	(47,412)	(25%)
Oil	103,911	139,620	(35,709)	(26%)
Total commodity revenue	$802,399	$1,873,011	$(1,070,612)	(57%)
Midstream revenue	30,565	32,798	(2,233)	(7%)
Other revenue	35,299	13,540	21,759	161%
Total revenue	$868,263	$1,919,349	$(1,051,086)	(55%)
Gain (loss) on derivative settlements (in thousands)
Natural gas	$177,139	$(782,525)	$959,664	(123%)
NGLs	10,594	(85,549)	96,143	(112%)
Oil	(9,669)	(27,728)	18,059	(65%)
Net gain (loss) on commodity derivative settlements(a)	$178,064	$(895,802)	$1,073,866	(120%)
Total revenue, inclusive of settled hedges	$1,046,327	$1,023,547	$22,780	2%


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	75


	Year Ended
	December 31, 2023	December 31, 2022	Change	% Change
Per Mcfe Metrics
Average realized sales price
(including impact of derivatives settled in cash)	$3.27	$3.30	$(0.03)	(1%)
Midstream and other revenue	0.22	0.16	0.06	38%
LOE	(0.71)	(0.62)	(0.09)	15%
Midstream operating expense	(0.23)	(0.24)	0.01	(4%)
Employees, administrative costs and professional services	(0.26)	(0.26)	—	—%
Recurring allowance for credit losses	(0.03)	—	(0.03)	(100%)
Production taxes	(0.21)	(0.25)	0.04	(16%)
Transportation expense	(0.32)	(0.40)	0.08	(20%)
Proceeds received from leasehold sales	0.08	0.01	0.07	700%
Adjusted EBITDA per Mcfe	$1.81	$1.70	$0.11	6%
Adjusted EBITDA Margin	52%	49%
Other financial metrics (in thousands)
Adjusted EBITDA	$542,794	$502,954	$39,840	8%
Operating profit (loss)	$1,161,051	$(671,403)	$1,832,454	(273%)
Net income (loss)	$759,701	$(620,598)	$1,380,299	(222%)


	Year Ended
	December 31, 2022	December 31, 2021	Change	% Change
Net production
Natural gas (MMcf)	255,597	234,643	20,954	9%
NGLs (MBbls)	5,200	3,558	1,642	46%
Oil (MBbls)	1,554	592	962	163%
Total production (MMcfe)	296,121	259,543	36,578	14%
Average daily production (MMcfepd)	811	711	100	14%
% Natural gas (Mcfe basis)	86%	90%
Average realized sales price (excluding impact of derivatives settled in cash)
Natural gas (Mcf)	$6.04	$3.49	$2.55	73%
NGLs (Bbls)	36.29	32.53	3.76	12%
Oil (Bbls)	89.85	65.26	24.59	38%
Total (Mcfe)	$6.33	$3.75	$2.58	69%
Average realized sales price (including impact of derivatives settled in cash)
Natural gas (Mcf)	$2.98	$2.36	$0.62	26%
NGLs (Bbls)	19.84	15.52	4.32	28%
Oil (Bbls)	72.00	71.68	0.32	—%
Total (Mcfe)	$3.30	$2.51	$0.79	31%
Revenue (in thousands)
Natural gas	$1,544,658	$818,726	$725,932	89%
NGLs	188,733	115,747	72,986	63%
Oil	139,620	38,634	100,986	261%
Total commodity revenue	$1,873,011	$973,107	$899,904	92%
Midstream revenue	32,798	31,988	810	3%
Other revenue	13,540	2,466	11,074	449%
Total revenue	$1,919,349	$1,007,561	$911,788	90%


76	Diversified Energy Company PLC Annual Report and Form 20-F 2023


	Year Ended
	December 31, 2022	December 31, 2021	Change	% Change
Gain (loss) on derivative settlements (in thousands)
Natural gas	$(782,525)	$(263,929)	$(518,596)	196%
NGLs	(85,549)	(60,530)	(25,019)	41%
Oil	(27,728)	3,803	(31,531)	(829%)
Net gain (loss) on commodity derivative settlements(a)	$(895,802)	$(320,656)	$(575,146)	179%
Total revenue, inclusive of settled hedges	$1,023,547	$686,905	$336,642	49%
Per Mcfe Metrics
Average realized sales price
(including impact of derivatives settled in cash)	$3.30	$2.51	$0.79	31%
Midstream and other revenue	0.16	0.13	0.03	23%
LOE	(0.62)	(0.46)	(0.16)	35%
Midstream operating expense	(0.24)	(0.23)	(0.01)	4%
Employees, administrative costs and professional services	(0.26)	(0.22)	(0.04)	18%
Recurring allowance for credit losses	—	0.02	(0.02)	(100%)
Production taxes	(0.25)	(0.12)	(0.13)	108%
Transportation expense	(0.40)	(0.31)	(0.09)	29%
Proceeds received from leasehold sales	0.01	—	0.01	100%
Adjusted EBITDA per Mcfe	$1.70	$1.32	$0.38	29%
Adjusted EBITDA Margin	49%	50%
Other financial metrics (in thousands)
Adjusted EBITDA	$502,954	$343,145	$159,809	47%
Operating profit (loss)	$(671,403)	$(467,064)	$(204,339)	44%
Net income (loss)	$(620,598)	$(325,206)	$(295,392)	91%

(a)Net gain (loss) on commodity derivative settlements represents cash (paid) or received on commodity derivative contracts. This excludes

settlements on foreign currency and interest rate derivatives as well as the gain (loss) on fair value adjustments for unsettled financial

instruments for each of the periods presented.

FORWARD-LOOKING STATEMENT

This Annual Report & Form 20-F contains forward-looking statements that can be identified by the following terminology,

including the terms “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,”

“estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible,” or the negative of these terms or other variations or

comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-

looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual

Report & Form 20-F and include, but are not limited to, statements regarding our intentions, beliefs or current expectations

concerning, among other things, our results of operations, financial positions, liquidity, prospects, growth, strategies and the

natural gas and oil industry. By their nature, forward-looking statements involve risk and uncertainty because they relate to

future events and circumstances.

Forward-looking statements are not guarantees of future performance and the actual results of our operations, financial

position and liquidity, and the development of the markets and the industry in which we operate, may differ materially from

those described in, or suggested by, the forward-looking statements contained in this Annual Report & Form 20-F. In addition,

even if the results of operations, financial position and liquidity, and the development of the markets and the industry in which

we operate are consistent with the forward-looking statements contained in this Annual Report & Form 20-F, those results or

developments may not be indicative of results or developments in subsequent periods. A number of factors could cause

results and developments to differ materially from those expressed or implied by the forward-looking statements including,

without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in

regulation, currency fluctuations, our ability to recover our reserves, changes in our business strategy, political and economic

uncertainty.

Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this

Annual Report & Form 20-F speak only as of the date of this Annual Report & Form 20-F, reflect our current view with respect

to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to our

operations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors identified in

this Annual Report & Form 20-F which could cause actual results to differ before making an investment decision. Subject to


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	77

the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules or applicable law, we

explicitly disclaim any obligation or undertaking publicly to release the result of any revisions to any forward-looking

statements in this Annual Report & Form 20-F that may occur due to any change in our expectations or to reflect events or

circumstances after the date of this Annual Report & Form 20-F.

PRODUCTION, REVENUE AND HEDGING

Total revenue in the year ended December 31, 2023 of $868 million decreased 55% from $1,919 million reported for the year

ended December 31, 2022, primarily due to a 58% decrease in the average realized sales price slightly offset by 1% higher

production. Including commodity hedge settlement gains of $178 million and losses of $896 million in 2023 and 2022,

respectively, total revenue, inclusive of settled hedges, increased by 2% to $1,046 million in 2023 from $1,024 million in 2022.

During the current year’s low commodity price environment, we have benefited from our ability to opportunistically elevate

our hedge floor during the elevated commodity market cycle in 2022. This enhancement in our weighted average hedge floor

helped us minimize the impact of the suppressed commodity pricing environment in 2023, during which we realized a

decrease in total commodity revenue of just $8 million, inclusive of settled hedges. Offsetting this slight decrease was an

increase of $12 million in total commodity revenue, inclusive of settled hedges, generated through increases in production. We

sold 299,632 MMcfe in 2023 versus 296,121 MMcfe in 2022. This increase in volumes sold was due to the March 2023 Tanos II

acquisition as well as the integration of a full year of production from the East Texas and ConocoPhillips acquisitions which

occurred in April and September of 2022, respectively.

The following table summarizes average commodity prices for the periods presented with Henry Hub on a per Mcf basis and

Mont Belvieu and WTI on a per Bbl basis:


	Year Ended
	December 31, 2023	December 31, 2022	$ Change	% Change
Henry Hub	$2.74	$6.62	$(3.88)	(59%)
Mont Belvieu	34.11	51.04	(16.93)	(33%)
WTI	77.62	93.53	(15.91)	(17%)


	Year Ended
	December 31, 2022	December 31, 2021	$ Change	% Change
Henry Hub	$6.62	$3.84	$2.78	72%
Mont Belvieu	51.04	47.49	3.55	7%
WTI	93.53	68.26	25.27	37%

Refer to Note 5 in the Notes to the Group Financial Statements for additional information regarding acquisitions.

COMMODITY REVENUE

The following table reconciles the change in commodity revenue (excluding the impact of hedges settled in cash) for the year

ended December 31, 2023 by reflecting the effect of changes in volume and in the underlying prices:


(In thousands)	Natural Gas	NGLs	Oil	Total
Commodity revenue for the year ended December 31, 2021	$818,726	$115,747	$38,634	$973,107
Volume increase (decrease)	73,129	53,414	62,780	189,323
Price increase (decrease)	652,803	19,572	38,206	710,581
Net increase (decrease)	725,932	72,986	100,986	899,904
Commodity revenue for the year ended December 31, 2022	$1,544,658	$188,733	$139,620	$1,873,011
Volume increase (decrease)	4,717	22,935	(15,903)	11,749
Price increase (decrease)	(992,208)	(70,347)	(19,806)	(1,082,361)
Net increase (decrease)	(987,491)	(47,412)	(35,709)	(1,070,612)
Commodity revenue for the year ended December 31, 2023	$557,167	$141,321	$103,911	$802,399


78	Diversified Energy Company PLC Annual Report and Form 20-F 2023

To manage our cash flows in a volatile commodity price environment and as required by our SPV-level asset-backed securities,

we utilize derivative contracts which allow us to fix the sales prices at a per unit level for approximately 83% of our production

to mitigate commodity risk. The tables below set forth the commodity hedge impact on commodity revenue, excluding and

including cash received for commodity hedge settlements:


(In thousands, except per unit data)	Year Ended December 31, 2023
	Natural Gas		NGLs		Oil		Total Commodity
	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
	Revenue	per Mcf	Revenue	per Bbl	Revenue	per Bbl	Revenue	per Mcfe
Excluding hedge impact	$557,167	$2.17	$141,321	$24.23	$103,911	$75.46	$802,399	$2.68
Commodity hedge impact	177,139	0.69	10,594	1.82	(9,669)	(7.02)	178,064	0.59
Including hedge impact	$734,306	$2.86	$151,915	$26.05	$94,242	$68.44	$980,463	$3.27


(In thousands, except per unit data)	Year Ended December 31, 2022
	Natural Gas		NGLs		Oil		Total Commodity
	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
	Revenue	per Mcf	Revenue	per Bbl	Revenue	per Bbl	Revenue	per Mcfe
Excluding hedge impact	$1,544,658	$6.04	$188,733	$36.29	$139,620	$89.85	$1,873,011	$6.33
Commodity hedge impact	(782,525)	(3.06)	(85,549)	(16.45)	(27,728)	(17.85)	(895,802)	(3.03)
Including hedge impact	$762,133	$2.98	$103,184	$19.84	$111,892	$72.00	$977,209	$3.30


(In thousands, except per unit data)	Year Ended December 31, 2021
	Natural Gas		NGLs		Oil		Total Commodity
	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
	Revenue	per Mcf	Revenue	per Bbl	Revenue	per Bbl	Revenue	per Mcfe
Excluding hedge impact	$818,726	$3.49	$115,747	$32.53	$38,634	$65.26	$973,107	$3.75
Commodity hedge impact	(263,929)	(1.13)	(60,530)	(17.01)	3,803	6.42	(320,656)	(1.24)
Including hedge impact	$554,797	$2.36	$55,217	$15.52	$42,437	$71.68	$652,451	$2.51

Refer to Note 13 in the Notes to the Group Financial Statements for additional information regarding derivative

financial instruments.

EXPENSES


(In thousands, except per unit data)	Year Ended
	December 31, 2023	Per	December 31, 2022	Per	Total Change		Per Mcfe Change
	December 31, 2023	Per Mcfe	December 31, 2022	Per Mcfe	$	%	$	%
LOE(a)	$213,078	$0.71	$182,817	$0.62	$30,261	17%	$0.09	15%
Production taxes(b)	61,474	0.21	73,849	0.25	(12,375)	(17%)	(0.04)	(16%)
Midstream operating expenses(c)	69,792	0.23	71,154	0.24	(1,362)	(2%)	(0.01)	(4%)
Transportation expenses(d)	96,218	0.32	118,073	0.40	(21,855)	(19%)	(0.08)	(20%)
Total operating expenses	$440,562	$1.47	$445,893	$1.51	$(5,331)	(1%)	$(0.04)	(3%)
Employees, administrative costs and professional services(e)	78,659	0.26	77,172	0.26	1,487	2%	—	—%
Costs associated with acquisitions(f)	16,775	0.06	15,545	0.05	1,230	8%	0.01	20%
Other adjusting costs(g)	17,794	0.06	69,967	0.24	(52,173)	(75%)	(0.18)	(75%)
Non-cash equity compensation(h)	6,494	0.02	8,051	0.03	(1,557)	(19%)	(0.01)	(33%)
Total operating and G&A expenses	$560,284	$1.87	$616,628	$2.09	$(56,344)	(9%)	$(0.22)	(11%)
Depreciation, depletion and amortization	224,546	0.75	222,257	0.75	2,289	1%	—	—%
Allowance for credit losses(i)	8,478	0.03	—	—	8,478	100%	0.03	100%
Total expenses	$793,308	$2.65	$838,885	$2.84	$(45,577)	(5%)	$(0.19)	(7%)


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	79


(In thousands, except per unit data)	Year Ended
	December 31, 2022	Per	December 31, 2021	Per	Total Change		Per Mcfe Change
	December 31, 2022	Per Mcfe	December 31, 2021	Per Mcfe	$	%	$	%
LOE(a)	$182,817	$0.62	$119,594	$0.46	$63,223	53%	$0.16	35%
Production taxes(b)	73,849	0.25	30,518	0.12	43,331	142%	0.13	108%
Midstream operating expenses(c)	71,154	0.24	60,481	0.23	10,673	18%	0.01	4%
Transportation expenses(d)	118,073	0.40	80,620	0.31	37,453	46%	0.09	29%
Total operating expenses	$445,893	$1.51	$291,213	$1.12	$154,680	53%	$0.39	35%
Employees, administrative costs and professional services(e)	77,172	0.26	56,812	0.22	20,360	36%	0.04	18%
Costs associated with acquisitions(f)	15,545	0.05	27,743	0.11	(12,198)	(44%)	(0.06)	(55%)
Other adjusting costs(g)	69,967	0.24	10,371	0.04	59,596	575%	0.20	500%
Non-cash equity compensation(h)	8,051	0.03	7,400	0.03	651	9%	—	—%
Total operating and G&A expenses	$616,628	$2.09	$393,539	$1.52	$223,089	57%	$0.57	38%
Depreciation, depletion and amortization	222,257	0.75	167,644	0.65	54,613	33%	0.10	15%
Allowance for credit losses(i)	—	—	(4,265)	(0.02)	4,265	(100%)	0.02	(100%)
Total expenses	$838,885	$2.84	$556,918	$2.15	$281,967	51%	$0.69	32%

(a)LOE includes costs incurred to maintain producing properties. Such costs include direct and contract labor, repairs and maintenance, water

hauling, compression, automobile, insurance, and materials and supplies expenses.

(b)Production taxes include severance and property taxes. Severance taxes are generally paid on produced natural gas, NGLs and oil

production at fixed rates established by federal, state or local taxing authorities. Property taxes are generally based on the taxing

jurisdictions’ valuation of the Group’s natural gas and oil properties and midstream assets.

(c)Midstream operating expenses are daily costs incurred to operate the Group’s owned midstream assets inclusive of employee and

benefit expenses.

(d)Transportation expenses are daily costs incurred from third-party systems to gather, process and transport the Group’s natural gas, NGLs and oil.

(e)Employees, administrative costs and professional services includes 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.

(f)We generally incur costs related to the integration of acquisitions, which will vary for each acquisition. For acquisitions considered to be a

business combination, these costs include transaction costs directly associated with a successful acquisition transaction. These costs also

include costs associated with transition service arrangements where we pay the seller of the acquired entity a fee to handle various G&A

functions until we have fully integrated the assets onto our systems. In addition, these costs include costs related to integrating IT systems

and consulting as well as internal workforce costs directly related to integrating acquisitions into our system.

(g)Other adjusting costs include items that affect the comparability of results or that are not indicative of trends in the ongoing business. These

costs consist of one time projects, contemplated transactions or financing arrangements, contract terminations, deal breakage and/or

sourcing costs for acquisitions, and unused firm transportation.

(h)Non-cash equity compensation reflects the expense recognition related to share-based compensation provided to certain key members of

the management team. Refer to Note 17 in the Notes to the Group Financial Statements for additional information regarding non-cash share-

based compensation.

(i)Allowance for credit losses consists of the recognition and reversal of credit losses. Refer to Note 14 in the Notes to the Group Financial

Statements for additional information regarding credit losses.

Operating Expenses

We experienced decreases in per unit operating expense of 3%, or $0.04 per Mcfe, resulting from:

—Higher per Mcfe LOE that increased 15%, or $0.09 per Mcfe, reflective of changes in our portfolio mix due to the higher cost

structure of the Central Region and our growing presence there. LOE includes cost from assets from our Tanos II acquisition

in March 2023 as well as a full year of expenses from the acquired East Texas Assets and ConocoPhillips assets acquired in

April and September 2022, respectively. Importantly, however, while per units costs increased, margins remained relatively

flat at 52%.

—Lower per Mcfe production taxes that declined 16%, or $0.04 per Mcfe were primarily attributable to a decrease in

severance taxes as a result of a decrease in revenue due to lower commodity prices; and

—Lower per Mcfe transportation expenses that declined 20%, or $0.08 per Mcfe, resulting from decreases in third-party

midstream rates that are tied to commodity pricing in the Central Region.


80	Diversified Energy Company PLC Annual Report and Form 20-F 2023

General and Administrative Expense

G&A expense decreased primarily due to:

—A decrease in other adjusting costs due to the comparatively limited transactional activity in 2023 as compared to 2022.

From time to time, we incur costs associated with potential acquisitions that include deposits, rights of first refusal, option

agreement costs and hedging costs incurred in connection with the potential acquisitions. At times, due to changing macro-

economic conditions, commodity price volatility and/or findings observed during our deal diligence efforts, we incur

expenses of this nature as breakage and/or deal sourcing fees. In 2021, we paid $25 million in costs associated with a

potential acquisition and, due to decisions we made in the first quarter of 2022, we terminated the transaction and wrote off

$25 million in certain acquisition related costs related to these items.

—In February 2022, we paid $28 million to terminate a fixed-price purchase contract associated with certain Barnett volumes

acquired during the Blackbeard acquisition. The contract extended through March 2024 and, as a result of the termination,

we will realize more favorable pricing over this period. This transaction also positioned us to refinance these assets as part

of the ABS IV financing arrangement and allowed us to enhance our liquidity by eliminating the need for a $20 million letter

of credit on our Credit Facility. This transaction was classified in other adjusting costs.

Other Expenses

Depreciation, depletion and amortization (“DD&A”) increased due to higher depletion expense due to a 1% increase in

production attributable to an increased number of producing wells from acquisitions.

Allowance for credit losses increased due to the impact on anticipated credit losses on joint interest owner receivables has a

direct relationship with pricing and distributions to individual owners. As the pricing environment declined in 2023, the

underlying well economics did as well, and as a result, in 2023, we increased our reserve by $8 million.

Refer to Notes 5, 10, 11 and 13 in the Notes to the Group Financial Statements for additional information regarding acquisitions,

natural gas and oil properties, property, plant and equipment and derivative financial instruments, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

We recorded the following gain (loss) on derivative financial instruments in the Consolidated Statement of Comprehensive

Income for the periods presented:


(In thousands)	Year Ended
(In thousands)	December 31, 2023	December 31, 2022	$ Change	% Change
Net gain (loss) on commodity derivatives settlements(a)	$178,064	$(895,802)	$1,073,866	(120%)
Net gain (loss) on interest rate swap(a)	(2,722)	(1,434)	(1,288)	90%
Gain (loss) on foreign currency hedges(a)	(521)	—	(521)	(100%)
Total gain (loss) on settled derivative instruments	$174,821	$(897,236)	$1,072,057	(119%)
Gain (loss) on fair value adjustments of unsettled financial instruments(b)	905,695	(861,457)	1,767,152	(205%)
Total gain (loss) on derivative financial instruments	$1,080,516	$(1,758,693)	$2,839,209	(161%)


(In thousands)	Year Ended
(In thousands)	December 31, 2022	December 31, 2021	$ Change	% Change
Net gain (loss) on commodity derivatives settlements(a)	$(895,802)	$(320,656)	$(575,146)	179%
Net gain (loss) on interest rate swaps(a)	(1,434)	(530)	(904)	171%
Gain (loss) on foreign currency hedges(a)	—	(1,227)	1,227	(100%)
Total gain (loss) on settled derivative instruments	$(897,236)	$(322,413)	$(574,823)	178%
Gain (loss) on fair value adjustments of unsettled financial instruments(b)	(861,457)	(652,465)	(208,992)	32%
Total gain (loss) on derivative financial instruments	$(1,758,693)	$(974,878)	$(783,815)	80%

(a)Represents the cash settlement of hedges that settled during the period.

(b)Represents the change in fair value of financial instruments net of removing the carrying value of hedges that settled during the period.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	81

For the year ended December 31, 2023, we recognized a gain on derivative financial instruments of $1,081 million compared to

a loss of $1,759 million in 2022. Adjusting our unsettled derivative contracts to their fair values drove a gain of $906 million in

2023, as compared to a loss of $861 million in 2022.

For the year ended December 31, 2023, we recognized a gain on settled derivative instruments of $175 million as compared to

a loss of $897 million in 2022. The gain on settled derivative instruments relates to lower commodity market prices than we

secured through our derivative contracts. With consistent reliable cash flows central to our strategy, to protect our downside

risk we routinely hedge at levels that, based on our operating and overhead costs, provide a healthy margin even if it means

foregoing potential price upside.

Refer to Note 13 in the Notes to the Group Financial Statements for additional information regarding derivative

financial instruments.

GAIN ON BARGAIN PURCHASES

We recorded the following gain on bargain purchases in the Consolidated Statement of Comprehensive Income for the

periods presented:


(In thousands)	Year Ended
(In thousands)	December 31, 2023	December 31, 2022	$ Change	% Change
Gain on bargain purchases	$—	$4,447	$(4,447)	(100%)


(In thousands)	Year Ended
(In thousands)	December 31, 2022	December 31, 2021	$ Change	% Change
Gain on bargain purchases	$4,447	$58,072	$(53,625)	(92%)

In past years the E&P segment of the broader energy sector has been in a period of transition and rebalancing, thus creating

opportunities for healthy companies like ours to acquire high quality assets for less than their fair value. We have established a

track record of being disciplined in our bidding to acquire assets that meet our strict asset profile and are accretive to our

overall corporate value.

In 2022, we recognized a gain on bargain purchases of $4 million that was primarily a result of measurement period

adjustments associated with the 2021 Tapstone acquisition.

In 2021, we recognized a gain on bargain purchases of $58 million related to the acquisition of Tapstone and Tanos.

Gain on bargain purchases are not recorded for transactions that are accounted for as an acquisition of assets under IFRS 3,

Business Combinations (“IFRS 3”). Rather, the consideration paid is allocated to the assets acquired on a relative fair

value basis.

Refer to Note 5 in the Notes to the Group Financial Statements for additional information regarding acquisitions and bargain

purchase gain.

FINANCE COSTS


(In thousands)	Year Ended
(In thousands)	December 31, 2023	December 31, 2022	$ Change	% Change
Interest expense, net of capitalized and income amounts(a)	$117,808	$86,840	$30,968	36%
Amortization of discount and deferred finance costs	16,358	13,903	2,455	18%
Other	—	56	(56)	(100%)
Total finance costs	$134,166	$100,799	$33,367	33%


(In thousands)	Year Ended
(In thousands)	December 31, 2022	December 31, 2021	$ Change	% Change
Interest expense, net of capitalized and income amounts(a)	$86,840	$42,370	$44,470	105%
Amortization of discount and deferred finance costs	13,903	8,191	5,712	70%
Other	56	67	(11)	(16%)
Total finance costs	$100,799	$50,628	$50,171	99%


82	Diversified Energy Company PLC Annual Report and Form 20-F 2023

(a)Includes payments related to borrowings and leases.

For the year ended December 31, 2023, interest expense of $118 million increased by $31 million compared to $87 million in

2022, primarily due to the increase in borrowings to fund our 2023 acquisition, incurring a full year of interest on borrowings

associated with the 2022 acquisitions and an increase in the weighted average interest rate on borrowings year-over-year.

As of December 31, 2023 and 2022, total borrowings were $1,325 million and $1,498 million, respectively. For the period ended

December 31, 2023, the weighted average interest rate on borrowings was 6.03% as compared to 5.51% as of December 31,

2022. As of December 31, 2023, 87% of our borrowings now reside in fixed-rate, hedge-protected, amortizing structures

compared to 96% as of December 31, 2022.

Refer to Notes 5, 20, and 21 in the Notes to the Group Financial Statements for additional information regarding acquisitions,

leases and borrowings, respectively.

TAXATION

The effective tax rate is calculated on the face of the Statement of Comprehensive Income by dividing the amount of recorded

income tax benefit (expense) by the income (loss) before taxation as follows:


(In thousands)	Year Ended
(In thousands)	December 31, 2023	December 31, 2022	$ Change	% Change
Income (loss) before taxation	$1,000,344	$(799,502)	$1,799,846	(225%)
Income tax benefit (expenses)	(240,643)	178,904	(419,547)	(235%)
Effective tax rate	24.1%	22.4%


(In thousands)	Year Ended
(In thousands)	December 31, 2022	December 31, 2021	$ Change	% Change
Income (loss) before taxation	$(799,502)	$(550,900)	$(248,602)	45%
Income tax benefit (expenses)	178,904	225,694	(46,790)	(21%)
Effective tax rate	22.4%	41.0%

The differences between the statutory U.S. federal income tax rate and the effective tax rates are summarized as follows:


	Year Ended
	December 31, 2023	December 31, 2022	December 31, 2021
Expected tax at statutory U.S. federal income tax rate	21.0%	21.0%	21.0%
State income taxes, net of federal tax benefit	3.1%	1.2%	4.4%
Federal credits	—%	—%	15.4%
Other, net	—%	0.2%	0.2%
Effective tax rate	24.1%	22.4%	41.0%

For the year ended December 31, 2023, we reported a tax expense of $241 million, a change of $420 million, compared to a

benefit of $179 million in 2022 which was a result of the change in the loss before taxation and a change in the amount of tax

credits generated relative to the pre-tax loss. The resulting effective tax rates for the years ended December 31, 2023 and

2022 were 24.1% and 22.4%, respectively. The effective tax rate can be materially impacted by the recognition of the marginal

well tax credit available to qualified producers as noted in our 2021 effective tax rate. A marginal well tax credit was not

available in 2022 and this tax credit has not been announced for 2023. The federal government provides these credits to

encourage companies to continue operating lower-volume wells during periods of low prices to maintain the underlying jobs

they create and the state and local tax revenues they generate for communities to support schools, social programs, law

enforcement and other similar public services.

Refer to Note 8 in the Notes to the Group Financial Statements for additional information regarding taxation.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	83

OPERATING PROFIT, NET INCOME, ADJUSTED EBITDA AND EPS


(In thousands, except per unit data)	Year Ended
(In thousands, except per unit data)	December 31, 2023	December 31, 2022	$ Change	% Change
Operating profit (loss)	$1,161,051	$(671,403)	$1,832,454	(273%)
Net income (loss)	759,701	(620,598)	1,380,299	(222%)
Adjusted EBITDA	542,794	502,954	39,840	8%
Earnings (loss) per share - basic	$16.07	$(14.82)	$30.89	(208%)
Earnings (loss) per share - diluted	$15.95	$(14.82)	$30.77	(208%)


(In thousands, except per unit data)	Year Ended
(In thousands, except per unit data)	December 31, 2022	December 31, 2021	$ Change	% Change
Operating profit (loss)	$(671,403)	$(467,064)	$(204,339)	44%
Net income (loss)	(620,598)	(325,206)	(295,392)	91%
Adjusted EBITDA	502,954	343,145	159,809	47%
Earnings (loss) per share - basic	$(14.82)	$(8.20)	$(6.62)	81%
Earnings (loss) per share - diluted	$(14.82)	$(8.20)	$(6.62)	81%

For the year ended December 31, 2023, we reported net income of $760 million and basic EPS of $16.07 ($15.95 diluted EPS)

compared to net loss of $621 million and basic loss per share of $14.82 ($14.82 diluted loss per share) in 2022, an increase of

222% and 208%, respectively. We also reported an operating profit of $1,161 million compared with an operating loss of $671

million for the years ended December 31, 2023 and 2022, respectively. This year-over-year increase was primarily attributable

to a $2,839 million increase in gains on derivatives, a $40 million increased in gains on sale of assets, offset by a decrease in

gross profit of $1,048 million, $33 million more in finance costs, and $420 million more income tax expense as compared

to 2022.

Excluding the mark-to-market gain on long-dated derivative valuations, as well as other customary adjustments, we reported

adjusted EBITDA of $543 million for the year ended December 31, 2023 compared to $503 million for the year ended

December 31, 2022, representing an increase of 8% driven by our growth through the Tanos II acquisition in 2023 and a full

year of the 2022 East Texas Assets and ConocoPhillips acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity are cash generated from operations and available borrowings under our Credit Facility. To

minimize interest expense, we use our excess cash flow to reduce borrowings on our Credit Facility and as a result have

historically carried little cash on our Consolidated Statement of Financial Position as evidenced by our $4 million and $7 million

in cash and cash equivalents as of December 31, 2023 and 2022, respectively.

When we acquire assets to grow, we complement our Credit Facility with asset-backed debt securitized by certain natural gas

and oil assets, which are long-term, fixed-rate, fully-amortizing debt structures that better match the long-life nature of our

assets. These structures afford us low borrowing rates and also provide a visible path for reducing leverage as we make

scheduled principal payments. For larger value-adding acquisitions, and to ensure we maintain a leverage profile that we

believe is appropriate for the type of assets we acquire, we also raise proceeds through secondary equity offerings from time

to time.

We monitor our working capital to ensure that the levels remain adequate to operate the business with excess liquidity

primarily utilized for the repayment of debt or dividends to shareholders. In addition to working capital management, we have

a disciplined approach to managing operating costs and allocating capital resources, ensuring that we are generating returns

on our capital investments to support the strategic initiatives in our business operations.

Capital expenditures were $74 million for the year ended December 31, 2023 compared to $86 million for the year ended

December 31, 2022. This decrease in capital expenditures was primarily driven by the completion of wells in 2022 that were

under development by Tapstone at the time we closed that acquisition in 2021. While our March 2023 Tanos II acquisition also

contained wells under development at the time of acquisition, the capital expenditures needed for their development during

2023 was less significant than that required during 2022. We expect to meet our capital expenditure needs for the foreseeable

future from our operating cash flows and our existing cash and cash equivalents. Our future capital requirements will depend

on several factors, including our growth rate and future acquisitions, among other things.

With respect to our other known current obligations, we believe that our sources of liquidity and capital resources will be

sufficient to meet our existing business needs for at least the next 12 months. However, our ability to satisfy our working

capital requirements, debt service obligations and planned capital expenditures will depend upon our future operating

performance, which will be affected by prevailing economic conditions in the natural gas and oil industry and other financial

and business factors, some of which are beyond our control.


84	Diversified Energy Company PLC Annual Report and Form 20-F 2023

Refer to Note 13 in the Notes to the Group Financial Statements for additional information regarding our hedging program to

mitigate the risk associated with future cash flow generation.

The table below represents our liquidity position as of December 31, 2023, 2022 and 2021.


	As of
(In thousands)	December 31, 2023	December 31, 2022	December 31, 2021
LESS: Cash	$3,753	$7,329	$12,558
Available borrowings under the Credit Facility(a)	134,817	183,332	222,263
Liquidity	$138,570	$190,661	$234,821

(a)Represents available borrowings under the Credit Facility of $146 million as of December 31, 2023 less outstanding letters of credit of $11

million as of such date. Represents available borrowings under the Credit Facility of $194 million as of December 31, 2022 less outstanding

letters of credit of $11 million as of such date. Represents available borrowings under the Credit Facility of $254 million as of December 31,

2021 less outstanding letters of credit of $32 million as of such date.

DEBT

Our net borrowings consisted of the following as of the reporting date:


	As of
(In thousands)	December 31, 2023	December 31, 2022
Credit Facility	$159,000	$56,000
ABS I Notes	100,898	125,864
ABS II Notes	125,922	147,458
ABS III Notes	274,710	319,856
ABS IV Notes	99,951	130,144
ABS V Notes	290,913	378,796
ABS VI Notes	159,357	212,446
Term Loan I	106,470	120,518
Other	7,627	7,084
Total debt	$1,324,848	$1,498,166
LESS: Cash	3,753	7,329
LESS: Restricted cash	36,252	55,388
Net debt	$1,284,843	$1,435,449

OUR CAPITAL EXPENDITURE PROGRAM

Our strategy to acquire and operate producing assets that generate adjusted EBITDA margins of approximately 50% allows us

to invest capital back into our operations. In addition, we have set goals to achieve “net zero” Scope 1 and Scope 2 emissions

by 2040 through new investments aimed at emissions reductions, such as investments in natural gas emissions detection

devices and conducting aerial scans of our assets.

The majority of our capital expenditures are focused on our midstream operations, which includes pipelines and compression,

while the remaining capital expenditures are focused on production optimization, technology, upstream operations, plugging

capacity expansion, fleet, emissions reductions, and when prudent, may include development activities targeted at replacing

production. Given our operational focus to acquire and operate mature conventional wells and unconventional wells with a

shallow decline rate, we do not incur the same level of large capital expenditures associated with drilling and completion

activities that would typically be incurred by other development focused exploration and production companies.

We have consistently targeted a disciplined leverage profile at or under 2.5 to 1.0 after giving effect to acquisitions and any

related financing arrangements. We believe this leverage range is supported by our differentiated business model, namely with

long-life, low-decline production providing resilient cash flows, and a strategic financial framework that is bolstered by

hedging and amortizing debt instruments. Our weighted-average hedge floor on natural gas production increased from $3.63

per Mcf as of December 31, 2022 to $3.87 per Mcf as of December 31, 2023.

Looking forward, we continue to seek to maximize cash flow. We plan to maintain our hedging strategy and take advantage of

market opportunities to raise the floor price of our risk management program. We will seek to retain our strategic advantages

in purposeful growth through a disciplined capital expenditure program that continues to secure low-cost financing that

supports acquisitive growth while maintaining low leverage and sufficient liquidity.


Strategic Report		Corporate Governance		Group Financial Statements		Additional Information	85

ASSET RETIREMENT OBLIGATIONS

We continue to be proactive and innovative with respect to asset retirement. In 2017, after our LSE IPO, we proactively began

to meet with state officials to develop a long-term plan to retire our growing portfolio of long-life wells. Collaborating with the

appropriate regulators, we designed our retirement activities to be equitable for all stakeholders with an emphasis on

the environment.

During the year ended December 31, 2023 we accomplished the following:

—Expanded asset retirement operations from 15 rigs at December 31, 2022 to 17 rigs at December 31, 2023 increasing our

asset retirement capacity in Appalachia;

—Retired 222 wells, inclusive of our Central Region operations, outpacing calendar year 2022 activity when we retired 214

wells. These retirements were achieved one full year in advance of our stated goal to retire 200 wells per year by year-end

2023; and

—Retired 182 outside party wells, including 148 state and federal orphan wells and 34 wells for other operators.

This growth in our asset retirement capacity provides us with the ability to further integrate our asset retirement operations

and generate cost efficiencies across a broader footprint. It will also provide us with the ability to generate additional third-

party revenues by providing a suite of services to other production companies which can be utilized to help fund the cost

associated with our own asset retirement program. As a result, we aim to obtain a prudent mix of both cost reduction and

third-party revenues to maximize the benefits of our internal asset retirement program.

Our asset retirement program reflects our solid commitment to a healthy environment and the surrounding communities, and

we anticipate continued investment and innovation in this area. During 2024, we will continue our work to realize the vertical

integration benefits of expanded internal asset retirement capacity to reduce reliance on third-party contractors, reduce

outsource risk, improve process quality and responsiveness, and increase control over environmental remediation and costs.

The composition of the provision for asset retirement obligations at the reporting date was as follows for the

periods presented:


	Year Ended
(In thousands)	December 31, 2023	December 31, 2022	December 31, 2021
Balance at beginning of period	$457,083	$525,589	$346,124
Additions(a)	3,250	24,395	96,292
Accretion	26,926	27,569	24,396
Asset retirement costs	(5,961)	(4,889)	(2,879)
Disposals(b)	(17,300)	(16,779)	(16,500)
Revisions to estimate(c)	42,650	(98,802)	78,156
Balance at end of period	$506,648	$457,083	$525,589
Less: Current asset retirement obligations	5,402	4,529	3,399
Non-current asset retirement obligations	$501,246	$452,554	$522,190

(a)Refer to Note 5 in the Notes to the Group Financial Statements for additional information regarding acquisitions and divestitures.

(b)Associated with the divestiture of natural gas and oil properties. Refer to Note 5 in the Notes to the Group Financial Statements for

additional information.

(c)As of December 31, 2023, we performed normal revisions to our asset retirement obligations, which resulted in a $43 million increase in the

liability. This increase was comprised of a $28 million increase attributable to a lower discount rate as a result of slightly decreased bond

yields as compared to 2022 as inflation began to increase at a lower rate and $16 million in cost revisions based on our recent asset

retirement experiences. Partially offsetting these decreases was a $1 million change attributed to timing. As of December 31, 2022, we

performed normal revisions to our asset retirement obligations, which resulted in a $99 million decrease in the liability. This decrease was

comprised of a $145 million decrease attributable to the lower discount rate which was then offset by a $29 million reduction in anticipated

asset retirement cost. The remaining change was attributable to timing. The lower discount rate was a result of macroeconomic factors

spurred by the COVID-19 recovery, which reduced bond yields and increased inflation. Cost reductions are based on our recent asset

retirement experiences. As of December 31, 2021, we performed normal revisions to our asset retirement obligations, which resulted in a $78

million increase in the liability. This increase was comprised of a $109 million increase attributable to the lower discount rate which was then

offset by a $27 million reduction in anticipated asset retirement cost. The remaining change was attributable to timing. The lower discount

rate was a result of macroeconomic factors spurred by the COVID-19 recovery, which reduced bond yields and increased inflation. Cost

reductions are based on our recent asset retirement experiences.

The anticipated future cash outflows for our asset retirement obligations on an undiscounted and discounted basis were as set

forth in the tables below as of December 31, 2023, 2022 and 2021. When discounting the obligation, we apply a contingency

allowance for annual inflationary cost increases to our current cost expectations and then discount the resulting cash flows

using a credit adjusted risk free discount rate resulting in a net discount rate of 3.4%, 3.6% and 2.9% for the periods indicated,


86	Diversified Energy Company PLC Annual Report and Form 20-F 2023

respectively. While the rate is comparatively small to the commonly utilized PV-10 metric in our industry, the impact is

significant due to the long-life low-decline nature of our portfolio. Although productive life varies within our well portfolio,

presently we expect all of our existing wells to have reached the end of their productive lives and be retired by approximately

2095, consistent with our reserve calculations which were independently evaluated by third-party engineers.

When evaluating our ability to meet our asset retirement obligations we review reserves models which utilize the income

approach to determine the expected discounted future net cash flows from estimated reserve quantities. These models

determine future revenues associated with production using forward pricing then consider the costs to produce and develop

reserves, as well as the cost of asset retirement at the end of a well’s life. These future net cash flows are discounted using a

weighted average cost of capital of 10% to produce the PV-10 of our reserves. After considering the asset retirement costs in

these models, our PV-10 was approximately $2.1 billion, $8.8 billion and $4.0 billion as of December 31, 2023, 2022 and 2021,

respectively, illustrating residual cash flows well beyond our retirement obligations.

As of