dec-20260630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2026

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

For the transition period from to

Commission file number: 001-41870


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

	Delaware		42-2283606
	State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

	1600 Corporate Drive Birmingham, Alabama		35242
	(Address of principal executive offices)		(Zip Code)


	Registrant’s telephone number, including area code:	(205) 408-0909

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	DEC	New York Stock Exchange

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

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, a smaller reporting company, or an emerging

growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of

the Exchange Act.


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

If an emerging growth company, 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The registrant had 70,769,563 shares of common stock outstanding (excluding shares held by the Employee Benefit Trust) as of August 5, 2026.


Table of Contents	Form 10-Q	Diversified Energy Company

Glossary of Terms

ABS - Asset-Backed Security

ASU - Accounting Standards Update

Bbl - Barrel or barrels of oil or natural gas liquids

Btu - A British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one

degree Fahrenheit.

E&P - Exploration and production

EBITDAX - Earnings before interest, tax, depreciation, amortization and exploration expense

EPS - Earnings per share

GAAP - U.S. Generally Accepted Accounting Principles

Henry Hub - A natural gas pipeline delivery point that serves as the benchmark natural gas price underlying NYMEX natural gas

futures contracts.

MBbls - Thousand barrels

Mcf - Thousand cubic feet of natural gas

Mcfe - Thousand cubic feet of natural gas equivalent

Midstream - Midstream activities include the processing, storing, transporting and marketing of natural gas, NGLs and oil.

MMbtu - Million British thermal units

MMcf - Million cubic feet of natural gas

MMcfe - Million cubic feet of natural gas equivalent

MMcfepd - Million cubic feet of natural gas equivalent per day

Mont Belvieu - A mature trading hub with a high level of liquidity and transparency that sets spot and futures prices for NGLs.

NGLs - Natural gas liquids, such as ethane, propane, butane and natural gasoline that are extracted from natural gas production

streams.

NYMEX - New York Mercantile Exchange

NYSE - New York Stock Exchange

Oil - Includes crude oil and condensate

PSU - Performance-based restricted stock unit

Realized price - The cash market price, less all expected quality, transportation and demand adjustments.

RSU - Time-based restricted stock unit

SOFR - Secured Overnight Financing Rate

Upstream - Upstream activities include exploration, discovery, and extraction of natural gas, NGLs, and oil. Often referred to as

exploration and production activities, or E&P.

WTI - West Texas Intermediate grade crude oil, used as a pricing benchmark for sales contracts and NYMEX oil futures contracts.


Table of Contents	Form 10-Q	Diversified Energy Company

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation

Reform Act of 1995 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 Quarterly Report on Form 10-Q 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, future acquisitions or dispositions, 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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q, 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, the behavior of other market participants, industry trends, competition, commodity prices, changes in regulation,

currency fluctuations, our ability to recover our reserves, our ability to successfully integrate acquisitions, our ability to obtain

financing to meet liquidity needs, changes in our business strategy, and political and economic uncertainty.

Forward-looking statements may, and often do, differ materially from actual results. No representation is made that any of these

statements or forecasts will come to pass or that any forecast results will be achieved. Any forward-looking statements in this

Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q, 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

Quarterly Report on Form 10-Q and in other documents that we file with or furnish to the SEC which could cause actual results to

differ. We explicitly disclaim any obligation or undertaking to revise any forward-looking statements in this Quarterly Report on Form

10-Q that may occur due to any change in our expectations or to reflect events or circumstances after the date of this Quarterly Report

on Form 10-Q except as may be required by applicable law.


Table of Contents	Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy Company

Condensed Consolidated Balance Sheets (Unaudited)


	As of
(In thousands, except par and share data)	June 30, 2026	December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$8,238	$29,697
Restricted cash	11,400	21,750
Accounts receivable, net	407,817	408,399
Derivatives	83,940	153,150
Prepaid expenses and other current assets	40,123	37,166
Total current assets	$551,518	$650,162
Noncurrent assets:
Natural gas and oil properties (successful efforts method):
Proved natural gas and oil properties	$5,943,495	$5,808,908
Unproved natural gas and oil properties	19,172	19,804
Accumulated depletion	(1,426,989)	(1,320,953)
Natural gas and oil properties, net	4,535,678	4,507,759
Property, plant, and equipment, net	458,301	446,022
Operating right of use assets	31,250	3,781
Restricted cash	83,747	93,663
Derivatives	37,558	81,702
Deferred tax assets	312,599	287,135
Other assets	99,028	98,735
Total assets	$6,109,679	$6,168,959
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$129,539	$81,814
Accrued liabilities	166,485	193,742
Revenue to be distributed	241,194	240,125
Current portion of long-term debt, net	107,140	236,553
Operating lease liabilities	10,955	2,131
Derivatives	137,865	155,959
Derivatives settlements payable	42,816	27,405
Other current liabilities	133,852	137,965
Total current liabilities	$969,846	$1,075,694
Noncurrent liabilities:
Asset retirement obligations	$880,954	$863,841
Operating lease liabilities	20,522	1,611
Long-term debt, net	2,823,457	2,715,461
Derivatives	378,526	440,567
Other liabilities	74,799	76,795
Total liabilities	$5,148,104	$5,173,969
Commitments and contingent liabilities (Note 12)
Stockholders' equity:
Common stock ($0.01 par value; 350,000,000 authorized; 71,388,065 and 76,979,625 shares issued and outstanding)	$713	$769
Additional paid in capital	1,418,822	1,491,719
Accumulated other comprehensive income (loss)	(583)	(583)
Retained earnings (accumulated deficit)	(468,261)	(507,847)
Total stockholders' equity attributable to DEC	$950,691	$984,058
Noncontrolling interests	10,884	10,932
Total stockholders' equity	$961,575	$994,990
Total liabilities and stockholders' equity	$6,109,679	$6,168,959

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


Table of Contents	Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy Company

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


(In thousands, except share and per share data)	Three Months Ended		Six Months Ended
(In thousands, except share and per share data)	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
Revenue
Natural gas	$163,696	$192,931	$478,668	$421,441
NGLs	85,813	52,651	147,378	100,745
Oil	254,191	149,186	435,290	202,001
Total commodity revenue	$503,700	$394,768	$1,061,336	$724,187
Gain (loss) on derivatives	291,034	169,071	(257,349)	(115,213)
Midstream	10,101	11,602	21,865	22,200
Other	7,073	11,256	13,200	18,038
Total revenue	$811,908	$586,697	$839,052	$649,212
Operating expense
Lease operating expense	$(141,242)	$(131,184)	$(274,210)	$(204,623)
Production taxes	(29,660)	(23,317)	(60,151)	(39,750)
Midstream operating expense	(20,439)	(19,361)	(40,675)	(37,997)
Transportation expense	(24,383)	(23,769)	(52,951)	(50,488)
Accretion of asset retirement obligation	(13,481)	(10,624)	(26,729)	(18,982)
General and administrative expense	(43,536)	(56,661)	(85,244)	(90,747)
Depreciation, depletion and amortization	(103,440)	(92,668)	(212,005)	(167,314)
Gain (loss) on natural gas and oil properties and equipment	36,070	62,269	134,147	63,958
Total operating expense	$(340,111)	$(295,315)	$(617,818)	$(545,943)
Income (loss) from operations	$471,797	$291,382	$221,234	$103,269
Other income (expense)
Interest expense	$(61,311)	$(56,130)	$(124,723)	$(98,842)
Loss on debt extinguishment	(23,882)	—	(23,882)	(26,971)
Other income (expense)	698	835	1,246	1,103
Income (loss) before taxation	$387,302	$236,087	$73,875	$(21,441)
Income tax benefit (expense)	(139,697)	61,828	13,065	(3,464)
Net income (loss)	$247,605	$297,915	$86,940	$(24,905)
Other comprehensive income (loss)	—	72	—	(138)
Total comprehensive income (loss)	$247,605	$297,987	$86,940	$(25,043)

Net income (loss) attributable to:
DEC	$246,949	$297,738	$86,332	$(25,460)
Noncontrolling interest	656	177	608	555
Net income (loss)	$247,605	$297,915	$86,940	$(24,905)

Earnings (loss) per share attributable to DEC
Basic	$3.42	$3.77	$1.17	$(0.37)
Diluted	$3.31	$3.67	$1.14	$(0.37)
Weighted average shares outstanding
Basic	72,296,949	78,936,076	73,767,908	68,821,946
Diluted	74,705,094	81,138,852	75,972,787	68,821,946

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


Table of Contents	Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy Company

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


						Total Stockholders' Equity Attributable to DEC
				Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Accumulated Deficit)
			Additional Paid in Capital					Total Stockholders' Equity
	Common Stock						Noncontrolling Interest
(In thousands, except share data)	Shares	Amount					Noncontrolling Interest
Balance as of December 31, 2024	50,649,844	$14,595	$1,145,889	$(935)	$(759,471)	$400,078	$11,879	$411,957
Net income (loss)	—	—	—	—	(323,198)	(323,198)	378	(322,820)
Other comprehensive income (loss)	—	—	—	(210)	—	(210)	—	(210)
Issuances of common stock	29,694,213	7,619	363,092	—	—	370,711	—	370,711
Repurchases of common stock	(169,194)	—	(2,273)	—	—	(2,273)	—	(2,273)
Share-based compensation	211,887	—	3,540	—	(1,262)	2,278	—	2,278
Dividends declared	—	—	17,153	—	(17,153)	—	—	—
Distributions to noncontrolling interest owners	—	—	—	—	—	—	(250)	(250)
Balance as of March 31, 2025	80,386,750	$22,214	$1,527,401	$(1,145)	$(1,101,084)	$447,386	$12,007	$459,393
Net income (loss)	—	—	—	—	297,738	297,738	177	297,915
Other comprehensive income (loss)	—	—	—	72	—	72	—	72
Issuances of common stock	—	—	(365)	—	—	(365)	—	(365)
Repurchases of common stock	(2,631,411)	(686)	(33,121)	—	—	(33,807)	—	(33,807)
Share-based compensation	12,444	—	2,704	—	(1,302)	1,402	—	1,402
Dividends declared	—	—	(22,925)	—	(22,671)	(45,596)	—	(45,596)
Distributions to noncontrolling interest owners	—	—	—	—	—	—	(676)	(676)
Balance as of June 30, 2025	77,767,783	$21,528	$1,473,694	$(1,073)	$(827,319)	$666,830	$11,508	$678,338

Balance as of December 31, 2025	76,979,625	$769	$1,491,719	$(583)	$(507,847)	$984,058	$10,932	$994,990
Net income (loss)	—	—	—	—	(160,617)	(160,617)	(48)	(160,665)
Repurchases of common stock	(5,033,364)	(50)	(70,679)	—	—	(70,729)	—	(70,729)
Share-based compensation	377,210	4	5,503	—	(2,407)	3,100	—	3,100
Dividends declared	—	—	(387)	—	(22,061)	(22,448)	—	(22,448)
Distributions to noncontrolling interest owners	—	—	—	—	—	—	(294)	(294)
Balance as of March 31, 2026	72,323,471	$723	$1,426,156	$(583)	$(692,932)	$733,364	$10,590	$743,954
Net income (loss)	—	—	—	—	246,949	246,949	656	247,605
Repurchases of common stock	(944,887)	(10)	(13,444)	—	—	(13,454)	—	(13,454)
Share-based compensation	9,481	—	5,024	—	(1,305)	3,719	—	3,719
Dividends declared	—	—	1,086	—	(20,973)	(19,887)	—	(19,887)
Distributions to noncontrolling interest owners	—	—	—	—	—	—	(362)	(362)
Balance as of June 30, 2026	71,388,065	$713	$1,418,822	$(583)	$(468,261)	$950,691	$10,884	$961,575

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


Table of Contents	Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy Company

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025
Cash flows from operating activities:
Net income (loss)	$86,940	$(24,905)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation, depletion and amortization	212,005	167,314
Accretion of asset retirement obligations	26,729	18,982
Income tax (benefit) expense	(13,065)	3,464
(Gain) loss on derivatives	257,349	115,213
Cash proceeds (payments) on settlement of derivatives	(211,858)	(37,584)
Settlement of asset retirement costs	(21,831)	(10,341)
(Gain) loss on natural gas and oil properties and equipment	(134,147)	(63,958)
Loss on early retirement of debt	23,882	26,971
Non-cash share-based compensation	9,380	4,377
Other	11,571	12,027
Changes in working capital:
Accounts receivable, net	(8,618)	45,530
Other assets	(8,483)	(5,621)
Accounts payable	44,743	(4,733)
Other liabilities	(17,081)	(81,598)
Net cash provided by operating activities	$257,516	$165,138
Cash flows from investing activities:
Consideration for business acquisitions, net of cash acquired	$—	$(329,709)
Consideration for asset acquisitions, net of cash acquired	(262,046)	(49,989)
Proceeds from divestitures	258,932	73,097
Capital expenditures	(98,392)	(89,269)
Net cash (used in) investing activities	$(101,506)	$(395,870)
Cash flows from financing activities:
Repayment of borrowings	$(2,245,740)	$(1,726,484)
Proceeds from borrowings	2,232,439	2,201,132
Prepayment charge on early retirement of debt	(24,223)	—
Debt issuance costs	(13,795)	(30,574)
Hedge modifications associated with ABS Notes	(7,955)	(171,134)
Proceeds from equity issuance, net	—	117,468
Principal element of lease payments	(12,276)	(8,175)
Dividends to stockholders	(43,034)	(39,824)
Distributions to noncontrolling interest owners	(656)	(927)
Repurchases of common stock (stock repurchase program)	(82,495)	(33,649)
Repurchases of common stock by the EBT, net	—	(2,459)
Net cash (used in) provided by financing activities	$(197,735)	$305,374
Net change in cash, cash equivalents and restricted cash	(41,725)	74,642
Cash, cash equivalents and restricted cash, beginning of period	145,110	52,259
Cash, cash equivalents and restricted cash, end of period	$103,385	$126,901
Cash and cash equivalents	8,238	23,743
Restricted cash	95,147	103,158
Total cash, cash equivalents and restricted cash	$103,385	$126,901

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Index to the Notes to the Condensed Consolidated Financial Statements (Unaudited)


Note 1 - Basis of Presentation and Summary of Significant Accounting Policies	9	Note 8 - Compensation Plans	19
Note 2 - Acquisitions & Divestitures	10	Note 9 - Asset Retirement Obligations	20
Note 3 - Income Tax	14	Note 10 - Borrowings	21
Note 4 - Earnings (Loss) Per Share	14	Note 11 - Fair Value	26
Note 5 - Natural Gas & Oil Properties	15	Note 12 - Commitments & Contingencies	27
Note 6 - Derivatives	15	Note 13 - Supplemental Cash Flow Information	28
Note 7 - Stockholders' Equity	18	Note 14 - Subsequent Events	28

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies

Description of the Company

Diversified Energy Company, a Delaware corporation (“Diversified,” “DEC,” “we,” “us,” “our,” or collectively with its wholly owned

subsidiaries, the “Company”) is an independent energy company engaged in the development, production, transportation and

marketing of natural gas, oil and NGLs. The Company’s assets are located in the United States within the following geographical

operating areas:

•Appalachian Region, which spans Ohio, Indiana, Pennsylvania, Virginia, West Virginia, Kentucky, Tennessee and Alabama;

•Central Region, which includes Texas, Oklahoma, New Mexico, and Louisiana;

•Other, which includes Florida and Wyoming.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted

accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to

such rules and regulations, certain disclosures have been condensed or omitted. These unaudited condensed consolidated financial

statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended

December 31, 2025, as included in the Company’s Annual Report on Form 10-K. The accompanying unaudited condensed

consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair

statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our direct and

indirect wholly owned subsidiaries and entities in which we have a controlling financial interest. Intercompany accounts and balances

have been eliminated.

Reclassification

Certain reclassifications have been made to prior period financial statements and related disclosures to conform to current period

presentation. These reclassifications have no impact on previously reported total assets, total liabilities, net income or total operating

cash flows.

Segment Reporting

In accordance with ASC 280, Segment Reporting, the Company determines its operating segments based on the components of the

business regularly reviewed by the chief executive officer, who serves as the chief operating decision maker (“CODM”), for purposes

of resource allocation and performance assessment. The CODM evaluates the Company’s operations in a consolidated manner.

Accordingly, the Company has one reportable segment.

The CODM uses consolidated income (loss) before income taxes to allocate resources and assess operating performance, and is also

regularly provided information on lease operating expense, transportation expense, production taxes, and general and administrative

expense, which represent significant segment expenses. Other segment items primarily consist of depreciation, depletion and

amortization, interest expense, and income tax expense (benefit). These amounts are derived from, and can be found within, the

Company’s Condensed Consolidated Statements of Comprehensive Income (Loss).

Segment profit or loss reconciles directly to consolidated income (loss) before income taxes, with no reconciling items.

The Company’s reportable segment, CODM, segment performance measures, and segment assets remain materially unchanged from

those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. The Company

maintains cash balances at financial institutions, which at times may exceed federally insured limits. The Company has not

experienced any losses in such accounts and believes it faces no significant credit risk related to cash and cash equivalents.

Restricted Cash

The Company classifies cash as restricted when contractual or regulatory requirements limit its withdrawal or use for general

corporate purposes. The Company presents restricted cash as either a current or noncurrent asset based on the expected timing of the

related obligations.

Restricted cash primarily consists of:

•Amounts the Company holds as collateral for surety bonds or that state agencies require for well abandonment obligations; and

•Cash reserves the Company maintains for interest payments and fees related to its asset-backed securitization arrangements,

which an independent indenture trustee administers.

The Company’s accounting policy and the nature of its restricted cash arrangements remain consistent with those described in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2025, with no material changes during the interim period.

Recently Adopted Accounting Standards

In the current year, the Company adopted the following accounting standards:


ASU Number	Description	Effective Date
ASU 2024-04	Debt—Debt with Conversion and Other Options	January 1, 2026
ASU 2025-05	Measurement of credit losses for accounts receivable and contract assets from transactions accounted for under Topic 606	January 1, 2026

The adoption of these standards did not significantly impact the Company’s Condensed Consolidated Financial Statements.

Recently Issued Accounting Standards Not Yet Adopted

The following accounting standard has been issued but is not yet effective and has not been applied in the Condensed Consolidated

Financial Statements:


ASU Number	Description	Effective Date	Impact on Financial Statements
ASU 2026-02	Environmental Credits and Environmental Credit Obligations (Topic 818)	January 1, 2028	The Company is assessing the impact, but does not expect a material effect.

The Company will adopt this standard on the effective date. Based on preliminary assessment, the Company does not expect the

adoption of this standard to have a material impact on its consolidated financial statements.

Note 2 - Acquisitions & Divestitures

2026 Acquisitions

Sheridan Holding Company III, LLC (“Sheridan”) Asset Acquisition

On April 30, 2026, the Company acquired certain oil and natural gas wells, leasehold interests and related assets from Sheridan. Given

the concentration of assets, this transaction was considered an asset acquisition rather than a business combination. The Company paid

net consideration of $236 million, inclusive of customary purchase price adjustments. The transaction was funded through proceeds

from the Company’s Credit Facility (as defined below).

Refer to Note 10 for additional information regarding borrowings.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

The fair value of the consideration transferred and the allocation to the assets acquired and liabilities assumed based on their relative

fair values as of April 30, 2026 were as follows (in thousands):


Consideration paid
Cash consideration	$236,387
Total consideration	$236,387

Net assets acquired
Natural gas and oil properties	$266,336
Property, plant and equipment, net	2,032
Derivatives, net	4,317
Accounts receivable, net	1,261
Asset retirement obligations	(32,081)
Other current liabilities	(5,478)
Net assets acquired	$236,387

Other Acquisitions

During the six months ended June 30, 2026, the Company collectively acquired certain midstream and plugging assets for total

consideration of $18 million, inclusive of customary purchase price adjustments, and transaction costs.

2026 Divestitures

Barnett Shale “Barnett” and Arkansas Asset Divestitures

On June 15, 2026, the Company divested certain non-core Barnett assets for net proceeds of $116 million after customary purchase

price adjustments. The proceeds received exceeded the carrying amount of the net assets divested resulting in a gain on natural gas and

oil properties and equipment of $19 million.

Additionally, on April 20, 2026, the company divested certain non-core assets in Arkansas for net proceeds of $15 million after

customary purchase price adjustments.

Other

During the six months ended June 30, 2026, the Company divested certain non-core undeveloped acreage for consideration of $126

million. The consideration received exceeded the carrying amount of the net assets divested resulting in a gain on natural gas and oil

properties and equipment of $125 million. Additionally, the disposal of various wells and property, plant and equipment in the normal

course of business resulted in cash proceeds of $2 million and a loss on natural gas and oil properties and equipment of $10 million.

2025 Acquisitions

Canvas Energy Inc. (“Canvas”) Asset Acquisition

On November 24, 2025, the Company acquired Canvas. The Company determined that substantially all of the fair value of the gross

assets acquired was concentrated in a single asset group; therefore, the transaction was accounted for as an asset acquisition. The

Company paid purchase consideration of $533 million, inclusive of customary purchase price adjustments. The purchase consideration

consisted of the issuance of 3,718,209 shares of common stock and $399 million in cash, inclusive of transaction costs of $13 million.

On the date of the acquisition, the Company settled the outstanding balance of $81 million on Canvas’s credit facility.

Refer to Notes 7 and 10 for additional information regarding stockholders’ equity and borrowings.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

The fair value of the consideration transferred and the allocation to the assets acquired and liabilities assumed based on their relative

fair values as of November 24, 2025 were as follows (in thousands):


Consideration paid
Cash consideration	$398,534
Fair value of common stock issued(a)	53,951
Payoff existing credit facility	80,602
Total consideration	$533,087

Net assets acquired
Cash	$51,679
Natural gas and oil properties	553,329
Property, plant and equipment, net	3,097
Other noncurrent assets	773
Accounts receivable, net	22,515
Other current assets	6,323
Asset retirement obligations	(10,963)
Deferred tax liability	(43,118)
Other noncurrent liabilities	(573)
Accounts payable	(8,625)
Other current liabilities	(41,350)
Net assets acquired	$533,087

(a)The fair value of the common stock issued was based on the closing price of the Company’s common stock on November 24, 2025

of $14.51. The fair value of our common stock is a Level 1 input as our stock price is a quoted price in an active market.

Maverick Natural Resources, LLC (“Maverick”) Business Combination

On March 14, 2025, the Company acquired Maverick. The Company determined the transaction did not have a significant

concentration of assets and that it acquired an identifiable set of inputs, processes, and outputs. As a result, the Company concluded

the transaction was a business combination. The Company paid purchase consideration of approximately $666 million, inclusive of

customary purchase price adjustments. The purchase consideration consisted of the issuance of 21,194,213 shares of common stock

and $211 million in cash. As part of the acquisition, the Company paid off on the acquisition date the $202 million balance

outstanding on Maverick’s credit facility and assumed $518 million of ABS Maverick Notes outstanding. Transaction costs associated

with the acquisition were $21 million and are included within G&A expense in the Consolidated Statements of Comprehensive

Income (Loss).

Refer to Notes 7 and 10 for additional information regarding stockholders’ equity and borrowings.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

The fair value of the consideration transferred and the fair value amounts of the assets acquired and liabilities assumed as of March 14,

2025 were as follows (in thousands):


Consideration paid
Cash consideration	$210,753
Fair value of common stock issued(a)	253,270
Payoff existing credit facility	201,533
Total consideration	$665,556

Net assets acquired
Cash	$20,894
Natural gas and oil properties	1,298,477
Property, plant and equipment, net	43,585
Restricted cash	62,048
Other noncurrent assets	28,861
Derivatives, net	4,829
Accounts receivable, net	153,205
Other current assets	14,695
Asset retirement obligations	(179,528)
Borrowings	(518,394)
Other noncurrent liabilities	(38,915)
Accounts payable	(42,967)
Accrued operating expenses	(55,583)
Revenues payable	(44,306)
Other current liabilities	(81,345)
Net assets acquired	$665,556

(a)The fair value of the common stock issued was based on the closing price of the Company’s common stock on March 14, 2025 of

$11.95. The fair value of our common stock is a Level 1 input as our stock price is a quoted price in an active market.

The fair value of the natural gas and oil properties was based on estimated future production volumes, adjusted for risk characteristics

associated with the classification of the acquired reserves, and related future net cash flows discounted using a weighted average cost

of capital. The Company utilized NYMEX strip pricing adjusted for inflation. Management utilized the assistance of a third-party

valuation expert to estimate the fair value of the natural gas and oil properties acquired. The Company considers the discount rate,

commodity pricing, production and operating expense to be the assumptions most sensitive to the fair value of the acquired natural gas

and oil properties and represent Level 3 inputs, other than NYMEX strip pricing which represents a Level 1 input.

Summit Natural Resources, LLC (“Summit”) Asset Acquisition

On February 27, 2025, the Company acquired certain upstream assets and related infrastructure within Virginia, West Virginia, and

Alabama of the Appalachian Region from Summit. Given the concentration of assets, this transaction was considered an asset

acquisition rather than a business combination. The Company paid consideration of $42 million, inclusive of transaction costs of $0.4

million and customary purchase price adjustments, substantially all of which was accounted for as natural gas and oil properties. The

transaction was funded through proceeds from the ABS X Notes collateralized, in part, by the acquired assets. Refer to Note 10 for

additional information regarding borrowings.

Other Acquisitions

During the six months ended June 30, 2025, the Company acquired certain midstream and upstream assets that are contiguous to its

existing Central Region assets. The Company paid total consideration of $16 million, inclusive of non-cash consideration of $4

million, customary purchase price adjustments, and transaction costs. Given the concentration of assets, these transactions were

considered asset acquisitions rather than business combinations.

2025 Divestitures

During the six months ended June 30, 2025, the Company divested certain non-core undeveloped acreage across its operating footprint

for consideration of $70 million. The consideration received exceeded the carrying amount of the net assets divested resulting in a gain

on natural gas and oil properties and equipment of $64 million.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Note 3 - Income Tax

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income,

plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes

for the six months ended June 30, 2026 and 2025 differs from the amount that would be provided by applying the statutory U.S.

federal income tax rate of 21% to pre-tax income primarily due to the impact of federal tax credits (principally the marginal well tax

credit), state income taxes, permanent differences, and discrete items recognized in the interim period.

The effective tax rates for the six months ended June 30, 2026 and 2025 were (17.7)% and (16.2)%, respectively. For the six months

ended June 30, 2026, we reported a tax benefit of $13 million, a change of $17 million, compared to a tax expense of $3 million for

the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 was primarily impacted by the

recognition of the federal marginal well tax credit available to qualified producers and by management’s estimate of the annual

effective tax rate expected for the full financial year. The federal government provides these credits to encourage companies to

continue producing 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.

The differences between the statutory U.S. federal income tax rate and the effective tax rates are summarized as follows:


Six Months Ended
June 30, 2026	June 30, 2025
U.S. federal statutory tax rate	21.0%	21.0%
State income taxes, net of federal tax benefit	4.5%	4.4%
Federal credits(a)	(43.8)%	(42.9)%
Other, net	0.6%	1.3%
Effective tax rate	(17.7)%	(16.2)%

(a)Federal tax credits consist primarily of the marginal well tax credit. Because the credit is a dollar amount determined

independently of pre-tax results, its impact, expressed as a percentage of pre-tax income (loss), can be positive or negative based

on the Company's forecasted annual pre-tax book income (loss) used in the estimated annual effective tax rate.

Note 4 - Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) attributable to common shareholders by the

weighted average number of shares of common stock outstanding during the period, excluding shares held in treasury (if any) and held

by the Employee Benefit Trust established by the Company in March 2022 to benefit its employees (“EBT”). Diluted EPS reflects the

potential dilution that could occur if share-based compensation awards were exercised or converted into shares, except when their

effect would be anti-dilutive. Refer to Note 7 for additional information regarding the EBT.

The following table presents the reconciliation of the numerators and denominators used in the calculation of basic and diluted EPS for

the periods presented:


(In thousands, except share and per share data)	Three Months Ended		Six Months Ended
(In thousands, except share and per share data)	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
Net income (loss) attributable to DEC	$246,949	$297,738	$86,332	$(25,460)

Weighted average shares outstanding - basic	72,296,949	78,936,076	73,767,908	68,821,946
Dilutive impact of potential shares	2,408,145	2,202,776	2,204,879	—
Weighted average shares outstanding - diluted	74,705,094	81,138,852	75,972,787	68,821,946

Basic earnings (loss) per share	$3.42	$3.77	$1.17	$(0.37)
Diluted earnings (loss) per share	$3.31	$3.67	$1.14	$(0.37)

Potentially dilutive shares(a)	312,557	3,921	249,757	3,510

(a)Share-based compensation awards excluded from the diluted EPS calculation because their effect would have been anti-dilutive.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Note 5 - Natural Gas & Oil Properties

The following table summarizes the Company's natural gas and oil properties for the period presented:


	As of
(In thousands)	June 30, 2026
Costs
Beginning balance	$5,828,712
Additions(a)	346,801
Disposals(b)	(212,846)
Ending balance	$5,962,667
Depletion and impairment
Beginning balance	$(1,320,953)
Depletion expense	(177,250)
Disposals(b)	71,214
Ending balance	$(1,426,989)
Net book value	$4,535,678

(a)During the six months ended June 30, 2026, the Company’s additions primarily consisted of the Sheridan acquisition in April

2026 as well as development and recurring capital expenditures.

(b)During the six months ended June 30, 2026, the Company’s disposals primarily consisted of the sale of the Barnett assets in June

2026.

Refer to Note 2 for additional information regarding acquisitions and divestitures.

Note 6 - Derivatives

The Company faces volatility in market prices and basis differentials for natural gas, NGLs and oil, affecting the predictability of its

cash flows from commodity sales. Additionally, the Company’s cash flows related to interest payments on variable rate debt

obligations can be impacted by fluctuations in interest rate markets, depending on its debt structure. To manage these risks, the

Company enters into derivative contracts primarily with major financial institutions and energy trading counterparties. As of June 30,

2026, these instruments included swaps, collars, basis swaps, and stand-alone put and call options. The Company does not intend to

hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative

instruments for hedge accounting treatment. Below is a description of these instruments:


Swaps:	When the Company sells a swap, it agrees to receive a fixed price for the contract while paying a floating market price to the counterparty;
Collars:	Arrangements that include a fixed floor price (purchased put option) and a fixed ceiling price (sold call option) based on an index price have no net costs overall. At the contract settlement date, (1) when the index price is higher than the ceiling price, the Company pays the counterparty the difference between the index price and ceiling price, (2) when the index price is between the floor and ceiling prices, no payments are due from either party, and (3) when the index price is below the floor price, the Company will receive the difference between the floor price and the index price. Some collar arrangements may also include a sold put option with a strike price below the purchased put option. Known as a three-way collar, the structure operates similarly to the standard collar. However, when the index price settles below the sold put option, the Company pays the counterparty the difference between the index price and sold put option, effectively enhancing realized pricing by the difference between the price of the sold and purchased put options;
Basis swaps:	Arrangements that guarantee a price differential for commodities from a specified delivery point. When the Company sells a basis swap, it receives a payment from the counterparty if the price differential exceeds the stated terms of the contract. Conversely, if the price differential is less than the stated terms, the Company pays the counterparty;


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy


Put options:	The Company purchases and sells put options in exchange for a premium. When the Company purchases a put option, it receives from the counterparty the excess amount (if any) by which the market price falls below the strike price of the put option at the time of settlement. If the market price is above the put option’s strike price, no payment is required from either party. Conversely, when the Company sells a put option, it pays the counterparty the excess amount (if any) by which the market price falls below the strike price of the put option at the time of settlement. If the market price is above the put option’s strike price, no payment is required from either party;
Call options:	The Company purchases and sells call options in exchange for a premium. When the Company purchases a call option, it receives from the counterparty the excess amount (if any) by which the market price exceeds the strike price of the call option at the time of settlement. If the market price is below the call option’s strike price, no payment is required from either party. When the Company sells a call option, it pays the counterparty the excess amount (if any) by which the market price exceeds the strike price of the call option at the time of settlement. If the market price is below the call option’s strike price, no payment is required from either party; and

The Company may elect to enter into offsetting transactions for the above instruments for the purpose of cancelling or terminating

certain positions.

The following table summarizes the Company's calculated fair value of derivatives for the date presented:


	As of June 30, 2026
(In thousands, except volume data)	Volume	Fair Value
Natural gas (MMbtu)
Swaps	1,167,568	$(218,213)
Two-way collars	143,091	(1,797)
Three-way collars	157,536	(11,000)
Stand-alone calls(a)	67,773	(34,324)
Basis swaps	764,286	(22,095)
Purchased puts	7,978	2,205
Sold puts	16,537	(3,615)
Total natural gas	2,324,769	$(288,839)
NGLs (MBbls)
Swaps	31,757	$(41,583)
Stand-alone calls	460	(2,006)
Total NGLs	32,217	$(43,589)
Oil (MBbls)
Swaps	33,585	$(45,308)
Three-way collars	3,291	(7,089)
Sold calls	1,335	(10,121)
Total oil	38,211	$(62,518)
Interest
SOFR interest rate swap ($5,520 principal hedged, 4.15% fixed-rate)		$53
Total interest		$53
Total fair value of derivatives		$(394,893)

(a)Includes future cash settlements for deferred premiums.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Netting of derivative assets and liabilities is applied at each reporting date when a legal right of offset exists under a master netting

arrangement. The Company elected to present these derivative assets and liabilities on a net basis when these conditions are satisfied.

The following table outlines the Company’s net derivatives for the date presented:


(In thousands)		As of
Derivatives	Consolidated Statement of Financial Position	June 30, 2026
Assets:
Current assets	Derivatives	$83,940
Noncurrent assets	Other assets	37,558
Total assets		$121,498
Liabilities
Current liabilities	Derivatives	$(137,865)
Noncurrent liabilities	Derivatives	(378,526)
Total liabilities		$(516,391)
Net assets (liabilities):
Net assets (liabilities) - current	Derivatives	$(53,925)
Net assets (liabilities) - noncurrent	Other assets / Derivatives	(340,968)
Total net assets (liabilities)		$(394,893)

The Company presents the fair value of derivative contracts on a net basis in the Consolidated Statement of Financial Position. Below

is the impact of this presentation on the Company’s recognized assets and liabilities for the date presented:


	As of June 30, 2026
(In thousands)	Presented without Effects of Netting	Effects of Netting	As Presented with Effects of Netting
Current assets	$125,135	$(41,195)	$83,940
Noncurrent assets	317,095	(279,537)	37,558
Total assets	$442,230	$(320,732)	$121,498
Current liabilities	(179,060)	41,195	(137,865)
Noncurrent liabilities	(658,063)	279,537	(378,526)
Total liabilities	$(837,123)	$320,732	$(516,391)
Total net assets (liabilities)	$(394,893)	$—	$(394,893)

The Company recorded the following gains (losses) on derivatives in the Condensed Consolidated Statements of Comprehensive

Income (Loss) for the specified periods:


	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
Net gain (loss) on commodity derivatives settlements	$(61,396)	$14,617	$(211,895)	$(37,654)
Net gain (loss) on interest rate swaps	17	35	37	70
Total gain (loss) on settled derivatives(a)	$(61,379)	$14,652	$(211,858)	$(37,584)
Gain (loss) on fair value adjustments of unsettled derivatives(b)	352,413	154,419	(45,491)	(77,629)
Total gain (loss) on derivatives	$291,034	$169,071	$(257,349)	$(115,213)

(a)Represents the cash settlement of derivatives that were settled during the period.

(b)Represents the change in fair value of derivatives, net of the carrying value of derivatives that were settled during the period.

All derivatives are classified as Level 2 instruments under ASC 820, as their valuation relies on observable market inputs other than

quoted prices. For further details related to fair value measurements, refer to Note 11.

Commodity Derivative Contract Modifications and Extinguishments

Occasionally, such as during the acquisition of producing assets, the completion of ABS financings, or in response to fluctuating price

environments, the Company may strategically modify, offset, terminate, or expand certain existing hedge positions. These

modifications can involve changes to the volume of production covered by contracts, the swap or strike price of specific derivative


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

contracts, and other similar aspects of the derivative agreements. The Company manages distinct, long-dated derivative contract

portfolios for its ABS financings and term loans. Additionally, the Company maintains a separate derivative contract portfolio for

assets secured by the Credit Facility. These derivative contract portfolios associated with the Company’s ABS financings, term loans,

and Credit Facility are presented in the Company’s Statement of Financial Position.

2026 Modifications and Extinguishments

In June 2026, the Company paid $8 million to modify contracts associated with the ABS IV Notes in connection with their

extinguishment. As these modifications were associated with a borrowing transaction, these amounts are presented as a financing

activity in the Consolidated Statement of Cash Flows. Refer to Note 10 for additional information regarding borrowings.

2025 Modifications and Extinguishments

In February 2025, the Company adjusted portions of its commodity derivative portfolio across its legal entities for approximately

$150 million in connection with the completion of the ABS X financing arrangement. The Company made further adjustments to its

commodity derivative portfolio for approximately $21 million for the retirement of the ABS I and Term Loan I financing

arrangements (each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025).

Refer to Note 10 for additional information regarding borrowings.

Note 7 - Stockholders' Equity

The Company is authorized to issue up to 350,000,000 shares of common stock, par value $0.01 per share. As of June 30, 2026 and

December 31, 2025, the Company had 71,388,065 and 76,979,625 shares of common stock issued and outstanding.

The Company is authorized to issue 30,000,000 shares of preferred stock, par value $0.01 per share. No preferred shares are issued or

outstanding.

Issuance of Common Stock

In March 2025, the Company announced the completion of its previously announced acquisition of Maverick. The transaction was

funded in part through the issuance of 21,194,213 new shares of common stock directly to the unitholders of Maverick. The total value

of the stock consideration was $253 million, excluding transaction costs of $0.4 million, based on the Company’s stock price on the

NYSE on the closing date of the Maverick transaction.

In February 2025, the Company issued 8,500,000 new shares of common stock at $14.50 per share to raise gross proceeds of $123

million, excluding transaction costs of $6 million. The Company used the net proceeds to repay a portion of the debt incurred in

connection with the Maverick acquisition.

For further details related to acquisitions, refer to Note 2.

Treasury Stock

The Company’s holdings in its own equity instruments are classified as treasury stock. The consideration paid, along with any directly

attributable incremental costs, is deducted from the Company’s stockholders’ equity until the shares are either cancelled or reissued.

No gain or loss is recognized in the Consolidated Statements of Comprehensive Income (Loss) upon the purchase, sale, issuance, or

cancellation of treasury stock.

Employee Benefit Trust (“EBT”)

In March 2022, the Company established the EBT to benefit its employees. The Company provides funding to the EBT to facilitate the

acquisition of shares. These shares are held in the EBT to fulfill awards and grants under the Company’s 2017 and 2025 Equity

Incentive Plans and the Employee Stock Purchase Plan (the “ESPP”). Shares held in the EBT are treated in the same manner as

treasury stock and are thus included in the Condensed Consolidated Financial Statements as treasury stock. No shares were acquired

by the EBT during the six months ended June 30, 2026 and 2025. As of June 30, 2026, the EBT held a total of 1,662,012 shares. For

further details related to share-based compensation, refer to Note 8.

Stock Repurchase Program

During the six months ended June 30, 2026, the Company repurchased 5,978,251 shares of common stock at an average price of

$14.08 per share, amounting to a total of $84 million and representing 8% of common stock issued and outstanding as of June 30,

2026. During the six months ended June 30, 2025, the Company repurchased 2,581,827 shares of common stock at an average price of

$13.33 per share, amounting to a total of $34 million and representing 3% of common stock issued and outstanding as of June 30,

2025.

The Company has recorded the repurchase of these shares of common stock as a reduction in common stock and additional paid in

capital. All repurchased shares of common stock were cancelled upon repurchase. As of June 30, 2026 and December 31, 2025, the

par value of the cancelled shares was retired from common stock in the Condensed Consolidated Balance Sheets.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Dividends

Dividends are declared at the discretion of the Board of Directors and are subject to applicable law and contractual restrictions.

Dividends are paid to holders of record as of the record date. Dividends are waived on shares held in the EBT.

The Company’s ability to pay dividends is subject to certain restrictions under its Credit Facility and other debt agreements, which

may limit dividend payments based on leverage ratios and other financial covenants. Refer to Note 10 for additional information.

Note 8 - Compensation Plans

Equity Incentive Plans

The 2017 Equity Incentive Plan (the “2017 Plan”), as amended through April 9, 2025, authorized issuances up to 10% of the

Company’s outstanding common stock and had 3,947,882 shares subject to outstanding awards as of November 21, 2025. On that

date, the Company adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which authorized and reserved 6,892,551 shares of

common stock, consisting of 2,944,669 newly authorized shares plus shares underlying outstanding awards under the 2017 Plan that

may become available upon forfeiture, cancellation, expiration, cash settlement, or withholding for taxes or exercise prices. Upon

adoption of the 2025 Plan, no further awards may be granted under the 2017 Plan, and only shares underlying awards outstanding as

of November 21, 2025 may be issued thereunder. As of June 30, 2026, 1,386,664 shares remained available for grant under the 2025

Plan, under which all future equity awards will be made.

RSU Awards

The following table summarizes RSU equity award activity for the respective period presented:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
Balance as of December 31, 2025	1,970,907	$12.17
Granted	1,427,841	15.53
Vested	(230,788)	19.84
Forfeited	—	—
Balance as of March 31, 2026	3,167,960	13.12
Granted	8,225	15.27
Vested	—	—
Forfeited	(18,404)	13.80
Balance as of June 30, 2026	3,157,781	$13.13

During the six months ended June 30, 2026, the total fair value of RSUs at the date of vesting was $3 million. As of June 30, 2026, the

Company had $28 million of unrecognized share-based compensation expense related to RSUs that will be recognized over a weighted

average period of 1.6 years.

RSUs can vest either on a cliff basis or ratably, depending on the service conditions. The fair value of the Company’s RSUs is

calculated using the closing price of our common stock on the NYSE at the grant date. This value is then expensed uniformly over the

vesting period.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

PSU Awards

The following table summarizes PSU equity award activity for the period presented:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
Balance as of December 31, 2025	1,306,690	$11.68
Granted	282,871	32.25
Vested	(286,992)	16.06
Forfeited	—	—
Balance as of March 31, 2026	1,302,569	$15.18
Granted	772	32.25
Vested	—	—
Forfeited	(3,580)	10.92
Balance as of June 30, 2026	1,299,761	$15.20

During the six months ended June 30, 2026, the total fair value of PSUs at the date of vesting was $2 million. As of June 30, 2026, the

Company had $11 million of unrecognized share-based compensation expense related to PSUs that will be recognized over a weighted

average period of 1.6 years.

PSUs are subject to cliff vesting based on specific performance criteria over a three-year period. Depending on the achievement of

these performance targets, the number of units that will vest can vary from 0% to 250% of the initial award.

The fair value of the Company’s PSUs is determined using a Monte Carlo simulation model as of the grant date. This calculated fair

value is then expensed uniformly over the vesting period. For PSUs granted during the respective periods presented, the inputs to the

Monte Carlo model included the following:


	Six Months Ended
	June 30, 2026	June 30, 2025
Risk-free rate of interest	3.8%	3.8%
Volatility(a)	47%	42%
Correlation with comparator group range	0.002 - 0.47	0.14 - 0.33

(a)Volatility utilizes the historical volatility for the Company’s share price.

Share-Based Compensation Expense

The following table presents the share-based compensation expense for the respective periods presented:


	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
RSUs	$3,563	$1,663	$6,767	$2,717
PSUs	1,330	872	2,573	1,643
ESPP	13	17	40	17
Total share-based compensation expense	$4,906	$2,552	$9,380	$4,377

Note 9 - Asset Retirement Obligations

The Company records a liability for the present value of the estimated future retirement costs associated with its natural gas and oil

properties. Additionally, the Company records a liability for the future retirement costs of its production facilities and pipelines when

required by contract, statute, or legal obligation. For the six months ended June 30, 2026, no state contractual agreements or statutes

related to production facilities and pipelines are expected to impose material obligations on the Company.

In estimating the present value of future retirement costs for its natural gas and oil properties, the Company considers several factors,

including the number and state jurisdictions of wells, current retirement costs by state and well type, and the Company’s retirement

plan, which is based on state requirements and the Company’s capacity to retire wells over their productive lives. The Company’s

assumptions are grounded in the current economic environment and are believed to provide a reasonable basis for estimating the future

liability. However, actual retirement costs will ultimately depend on future market prices at the time the retirement services are


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

performed. Additionally, the timing of retirement will vary based on when the fields cease to produce economically, which is

influenced by future natural gas and oil prices and the retirement schedule. These factors are inherently uncertain.

The Company incorporates annual inflationary cost increases into its current cost expectations and then discounts the resulting cash

flows using a credit-adjusted risk-free discount rate.

The components of the change in our asset retirement obligations are detailed below for the period presented:


	Six Months Ended
(In thousands)	June 30, 2026
Balance at beginning of period	$888,698
Additions(a)	33,230
Accretion expense	26,729
Asset retirement costs	(12,875)
Disposals(b)	(25,868)
Revisions	(3,519)
Balance at end of period	$906,395
Less: Current asset retirement obligations	25,441
Noncurrent asset retirement obligations	$880,954

(a)Additions primarily relate to the Sheridan acquisition.

(b)Disposals primarily relate to the Barnett assets divestiture.

Note 10 - Borrowings

The Company’s borrowings consist of the following amounts (in thousands) as of the date presented:


Instrument	Interest Rate		June 30, 2026
Credit Facility	6.88%	(a)	195,300
ABS VIII Notes	7.28%		526,158
ABS IX Notes	6.89%		63,265
ABS X Notes	7.07%		457,830
ABS XI Notes	6.61%		359,944
ABS XII Notes	6.29%		838,746
Nordic Bonds	9.75%		500,000
Other miscellaneous borrowings(b)			37,486
Total borrowings			$2,978,729
Less: Current portion of long-term debt			(107,140)
Less: Deferred financing costs			(37,579)
Less: Original issue discounts			(10,553)
Total noncurrent borrowings, net			$2,823,457

(a)Represents a variable interest rate based on utilization.

(b)Includes $20 million in notes payable issued by a third party financial institution in November 2024, collateralized by two natural

gas processing plants and various natural gas compressors and related support equipment in the Central Region, as of June 30,

2026.

Credit Facility

The Company maintains a Credit Facility with a lending syndicate, the borrowing base for which is redetermined semi-annually or in

certain other situations as described therein. The Company’s wholly owned subsidiary, DP RBL Co LLC, serves as the borrower

under the Credit Facility. The borrowing base is primarily determined by the value of the natural gas and oil properties that serve as

collateral for the lending arrangement, and it may fluctuate due to changes in collateral, which can result from acquisitions or the

establishment of ABS, term loans, or other lending structures.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

As of June 30, 2026, the Company’s Credit Facility had a borrowing base of $900 million and a maturity of March 2029. The Credit

Facility has an interest rate of SOFR plus an additional spread ranging from 2.75% to 3.75% based on utilization. Interest payments on

the Credit Facility are paid on a quarterly basis. Available borrowings under the Credit Facility were $669 million as of June 30, 2026,

which excludes $35 million in letters of credit issued to certain vendors.

ABS IV Notes

In February 2022, the Company formed Diversified ABS IV LLC (“ABS IV”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue asset-backed securities with a total principal amount of $160 million at par (the “ABS IV Notes”). The ABS IV

Notes were secured by a portion of the upstream producing assets acquired through the Blackbeard acquisition. The ABS IV Notes

had an annual interest rate of 4.95% and a legal final maturity date of February 2037. Both interest and principal payments on the ABS

IV Notes were made on a monthly basis.

In June 2026, the ABS IV Notes were repaid and retired from the Company’s outstanding debt in connection with the Company’s

divestiture of its Barnett assets.

ABS VI Notes

In October 2022, the Company formed Diversified ABS VI LLC (“ABS VI”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue, jointly with Oaktree Capital Management, L.P. (“Oaktree”), asset-backed securities with a total principal amount

of $460 million. The Company’s share amounted to $236 million before fees, reflecting its 51.25% ownership interest in the collateral

assets (the “ABS VI Notes”). The ABS VI Notes were issued at a 2.63% discount and were primarily secured by the upstream assets

jointly acquired with Oaktree in the Tapstone acquisition. The Company recorded its proportionate share of the ABS VI Notes in its

Condensed Consolidated Balance Sheets. In June 2024, as part of the Oaktree acquisition, the Company assumed Oaktree’s

proportionate debt of $133 million associated with the ABS VI Notes.

The ABS VI Notes carried an annual interest rate of 7.50% and had a legal final maturity date of November 2039. Both interest and

principal payments on the ABS VI Notes were made on a monthly basis.

In May 2026, the ABS VI Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance of the

ABS XII Notes (as defined below).

ABS VIII Notes

In May 2024, the Company formed Diversified ABS VIII LLC (“ABS VIII”), a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary, to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS VIII Notes,” “Class A-2 ABS VIII Notes,”

and collectively the “ABS VIII Notes”). The Class A-1 Notes were issued with a total principal amount of $400 million, while the

Class A-2 ABS VIII Notes were issued with a total principal amount of $210 million. The proceeds from these issuances were used to

repay the outstanding principal of the ABS III & ABS V notes, effectively retiring those notes from the Company’s outstanding debt.

Consequently, ABS III and ABS V were dissolved. The ABS VIII Notes are secured by the collateral that previously secured the ABS

III and ABS V notes, which includes certain upstream producing and midstream assets in the Appalachian Region owned by the

Company, and the remaining upstream assets in the Appalachian Region that were not securitized by previous ABS transactions.

The Class A-1 ABS VIII Notes carry an annual interest rate of 7.076%, while the Class A-2 ABS VIII Notes carry an annual interest

rate of 7.670%. These notes have an anticipated repayment date of May 2029 and a legal final maturity date of May 2044. Both

interest and principal payments on the ABS VIII Notes are made on a monthly basis.

ABS VIII is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if

the debt service coverage ratio (the “DSCR”) is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.50 to

1.00, then 50%, or (iii) if the DSCR is at least 1.50 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%,

otherwise 25%; or (c) if the loan-to-value ratio (“LTV”) exceeds 75%, then 100%, otherwise 25%.

ABS IX Notes

In June 2024, the Company formed DP Mustang Holdco LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS

IX,” formerly “ABS Facility Warehouse”), to secure a bridge loan facility (the “ABS Facility Warehouse Notes”). The initial draw on

the ABS Facility Warehouse Notes amounted to $71 million, which included $66 million in net proceeds, $3 million in restricted cash

interest reserve, and $2 million in debt issuance costs. The ABS Facility Warehouse Notes were secured by certain producing assets

that previously collateralized the Credit Facility. It carried an interest rate of SOFR plus an additional 3.75% and had a legal final

maturity date of May 2029. Both interest and principal payments on the ABS Facility Warehouse Notes were made on a monthly

basis.

In September 2024, the Company issued Class A and Class B asset-backed securities (the “Class A ABS IX Notes,” “Class B ABS IX

Notes,” and collectively the “ABS IX Notes”) with a total principal amount of $77 million. The Class A ABS IX Notes were issued

with a total principal amount of $71 million, while the Class B ABS IX Notes were issued with a total principal amount of $6 million.

The proceeds from these issuances were used to repay the outstanding principal of the ABS Facility Warehouse Notes, effectively


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

retiring it from the Company’s outstanding debt and resulting in a loss on the early retirement of debt amounting to $2 million. The

Class A ABS IX Notes carry an annual interest rate of 6.555% and have an anticipated repayment date of September 2029 and a legal

final maturity date of September 2044. The Class B ABS IX Notes carry an annual interest rate of 11.235%. Both interest and

principal payments on the ABS IX Notes are made on a monthly basis.

ABS IX is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the

DSCR at the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00, then

50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%, otherwise

25%; (c) if the LTV exceeds 75%, then 100%, otherwise 25%; or (d) if past the anticipated repayment date, then 100%, otherwise

25%. In addition, while the Class A Notes remain outstanding, the Class B Notes receive a minimum allocation of 14% of the excess

cash flow remaining after the payments ranking senior to them.

ABS X Notes

In February 2025, the Company formed Diversified ABS Phase X LLC, a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary (“ABS X”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS X Notes,” “Class A-2

ABS X Notes,” “Class B ABS X Notes,” and collectively the “ABS X Notes”) with a total principal amount of $530 million. The

Class A-1 ABS X Notes were issued with a total principal amount of $200 million. The Class A-2 ABS X Notes were issued with a

total principal amount of $240 million. The Class B ABS X Notes were issued with a total principal amount of $90 million. The

proceeds from these issuances were used to repay the outstanding principal of the ABS I Notes, ABS II Notes, and Term Loan I,

effectively retiring those notes from the Company’s outstanding debt. The ABS X Notes are secured by certain upstream producing

assets in the Appalachian Region owned by the Company, including those that previously collateralized the ABS I Notes, ABS II

Notes, and Term Loan I. Excess proceeds from the issuance of the Notes were used to fund the Summit acquisition and for general

corporate purposes. Refer to Note 2 for additional information regarding acquisitions.

The Class A-1 ABS X Notes carry an annual interest rate of 5.945%. The Class A-2 ABS X Notes carry an annual interest rate of

6.751%. The Class B ABS X Notes carry an annual interest rate of 10.398%. These notes have an anticipated repayment date of

February 2030 and a legal final maturity date of February 2045. Both interest and principal payments on the ABS X Notes are made

on a monthly basis.

ABS X is required to allocate 32.5% to 100% of any excess cash towards additional principal payments. Specifically, (a) (i) if the

DSCR as of the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00,

then 50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 32.5%; (b) if the production tracking rate is below 80%, then 100%,

otherwise 32.5%; (c) if the LTV exceeds 80%, then 100%, and (ii) if the LTV exceeds 75% but is not more than 80%, then 50%,

otherwise 32.5%; or (d) if the aggregate LTV exceeds 90%, then 100%. In addition, while the Class A Notes remain outstanding, the

Class B Notes receive a minimum allocation of 15% of the excess cash flow remaining after the payments ranking senior to them.

ABS Maverick Notes

In February 2025, the Company formed Maverick ABS Holdings LLC, a limited-purpose, bankruptcy-remote, wholly-owned

subsidiary (“ABS Maverick”), to hold the Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS Maverick

Notes,” “Class A-2 ABS Maverick Notes,” “Class B ABS Maverick Notes,” and collectively the “ABS Maverick Notes”) assumed as

part of the Maverick acquisition. These Notes had a total principal amount of $640 million upon issuance. The Class A-1 ABS

Maverick Notes were issued with a total principal amount of $285 million. The Class A-2 ABS Maverick Notes were issued with a

total principal amount of $260 million. The Class B ABS Maverick Notes were issued with a total principal amount of $95 million.

Upon acquisition, the ABS Maverick Notes carried a 1.6% market premium and were secured by certain upstream producing assets in

the Western Anadarko Basin acquired in the Maverick acquisition. Refer to Note 2 for additional information regarding acquisitions.

The Class A-1 ABS Maverick Notes had an annual interest rate of 8.121%. The Class A-2 ABS Maverick Notes had an annual interest

rate of 8.946%. The Class B ABS Maverick Notes had an annual interest rate of 12.436%. These notes had a legal final maturity date

of December 2038. Both interest and principal payments on the ABS Maverick Notes were made on a monthly basis.

In May 2026, the ABS Maverick Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance

of the ABS XII Notes (as defined below).

ABS XI Notes

In November 2025, the Company formed DP Keeneland Mile LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary

(“ABS XI”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS XI Notes,” “Class A-2 ABS XI

Notes,” “Class B ABS XI Notes,” and collectively the “ABS XI Notes”) with a total principal amount of $400 million. The Class A-1

ABS XI Notes were issued with a total principal amount of $247 million. The Class A-2 ABS XI Notes were issued with a total

principal amount of $91 million. The Class B ABS XI Notes were issued with a total principal amount of $62 million. The proceeds

from this issuance were used to fund, in part, the Canvas acquisition and are secured by certain upstream producing assets acquired.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

The Class A-1 ABS XI Notes carry an annual interest rate of 5.757%. The Class A-2 ABS XI Notes carry an annual interest rate of

6.547%. The Class B ABS XI Notes carry an annual interest rate of 10.129%. These notes have an anticipated repayment date of

November 2030 and a legal final maturity date of November 2045. Both interest and principal payments on the ABS XI Notes are

made on a monthly basis.

ABS XI is required to allocate 33% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the

DSCR is below 1.15 to 1.00, then 100%, (ii) if the DSCR is between 1.15 to 1.00 and 1.45 to 1.00, then 50%, or (iii) if the DSCR is at

least 1.45 to 1.00, then 33%; (b) if the production tracking rate is below 80%, then 100%, otherwise 33%; or (c) if the LTV exceeds

75%, then 100%, otherwise 33%. In addition, while the Class A Notes remain outstanding, the Class B Notes receive a minimum

allocation of 17.5% of the excess cash flow remaining after the payments ranking senior to them.

ABS XII Notes

In May 2026, the Company formed DP Red River LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS

XII”), to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS XII Notes,” “Class A-2 ABS XII Notes,” and

collectively the “ABS XII Notes”) with a total principal amount of $850 million. The Class A-1 ABS XII Notes were issued with a

total principal amount of $590 million. The Class A-2 ABS XII Notes were issued with a total principal amount of $260 million. The

proceeds from this issuance were used to repay the outstanding principal of the ABS Maverick Notes and ABS VI Notes, pay any

related premiums, fees, and expenses and for general corporate purposes. The ABS XII Notes are secured by specific upstream

producing assets in the Western Anadarko Basin that previously collateralized the ABS Maverick Notes and ABS VI Notes.

The Class A-1 ABS XII Notes carry an annual interest rate of 6.016%. The Class A-2 ABS XII Notes carry an annual interest rate of

6.910%. These notes have an anticipated repayment date of May 2031 and a legal final maturity date of May 2046. Both interest and

principal payments on the ABS XII Notes are made on a monthly basis.

ABS XII is required to allocate 45% to 100% of any excess cash flow towards additional principal payments. Absent a performance

trigger, the required allocation is 45% for the first 24 months following closing, 55% for months 25 through 36, and 60% thereafter, in

each case increased by 10 percentage points if the DSCR is below 1.75 to 1.00. The allocation increases to 100% if (a) the DSCR is

below 1.45 to 1.00, (b) the production tracking rate is below 85%, (c) the LTV is at or above 85% during the first 36 months following

closing, 80% during months 37 through 48, or 75% thereafter, or (d) a rapid amortization event has occurred and is continuing.

Nordic Bonds

In April 2025, the Company issued the Nordic Bonds, consisting of $300 million of new senior secured notes in the Nordic bond

market at a 2% discount, resulting in net proceeds of $294 million (the “Nordic Bonds”). The proceeds were used to repay existing

indebtedness and for general corporate purposes. The Nordic Bonds mature in April 2029 and bear interest at a fixed rate of 9.75% per

annum, payable semi-annually in arrears. The Bonds are secured by (i) all of the Company’s U.S. bank accounts, (ii) the equity

interests in Diversified Gas and Oil Company (“DGOC”) as well as DGOC’s equity interests in its direct operating subsidiaries and

(iii) interests in certain intercompany loans.

The Nordic Bonds were listed for trading on the Oslo Stock Exchange in October 2025.

In February 2026, the Company completed a $200 million tap-on offering, increasing the aggregate principal amount of the

outstanding Nordic Bonds to $500 million. The additional Bonds were issued at a 3.5% discount, resulting in net proceeds of $193

million before transaction costs and other fees. The proceeds were used for general corporate purposes. The additional Nordic Bonds

were listed for trading on the Oslo Stock Exchange in July 2026.

Early Retirement of Debt

In February 2025, the Company used proceeds from the ABS X Notes to repay the outstanding principal of the ABS I & II notes and

Term Loan I (each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025),

thereby retiring the ABS I & II notes and Term Loan I from the Company’s outstanding debt and resulting in a loss on the early

retirement of debt of $27 million. Concurrently, Diversified ABS Holdings LLC, Diversified ABS Phase II Holdings LLC, and DP

Bluegrass Holdings LLC were dissolved. The ABS X Notes are secured by the collateral previously securing the ABS I & II notes,

along with a portion of the collateral previously securing Term Loan I.

In March 2025, the Company used proceeds from the upsized borrowing base on the amended and restated credit agreement governing

the Credit Facility to repay the outstanding principal on Term Loan II (as previously defined in the Company’s Annual Report on

Form 10-K for the year ended December 31, 2025), thereby retiring Term Loan II from the Company’s outstanding debt and resulting

in a loss on the early retirement of debt of $0.2 million.

In May 2026, the Company used proceeds from the ABS XII Notes to repay the outstanding principal of the ABS Maverick Notes and

ABS VI Notes, thereby retiring the ABS Maverick Notes and ABS VI Notes from the Company’s outstanding debt resulting in a loss

on the early retirement of debt of $21 million. Concurrently, Maverick ABS Holdings LLC and Diversified ABS VI LLC were

dissolved. The ABS XII Notes are secured by the collateral previously securing the ABS Maverick Notes and ABS VI Notes.


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

In June 2026, the Company used proceeds from the Barnett assets divestiture to repay the outstanding principal of the ABS IV Notes,

thereby retiring the ABS IV Notes from the Company’s outstanding debt and resulting in a loss on the early retirement of debt of

$2 million. Concurrently, Diversified ABS IV LLC was dissolved.

Debt Covenants

Credit Facility

The Credit Facility contains certain customary representations and warranties and affirmative and negative covenants, including

covenants relating to: maintenance of books and records; financial reporting and notification; compliance with laws; maintenance of

properties and insurance; and limitations on incurrence of indebtedness, liens, fundamental changes, international operations, asset

sales, making certain debt payments and amendments, restrictive agreements, investments, restricted payments and hedging. The

restricted payment provision governs the Company’s ability to make discretionary payments such as dividends, share repurchases, or

other discretionary payments. DP RBL Co LLC must comply with the following restricted payments test in order to make

discretionary payments (i) leverage is less than 1.5x and borrowing base availability is >20%, or (ii) leverage is between 1.5x and

2.0x, free cash flow must be positive, and borrowing base availability must be >20%; and (iii) when leverage exceeds 2.0x, restricted

payments are prohibited.

Additional covenants require DP RBL Co LLC to maintain a ratio of total debt to EBITDAX of not more than 3.25 to 1.00 and a ratio

of current assets (with certain adjustments) to current liabilities of not less than 1.00 to 1.00 as of the last day of each fiscal quarter.

As of June 30, 2026, the Company was in compliance with all covenants for its Credit Facility.

ABS VIII, IX, X, XI, and XII Notes (Collectively, the “ABS Notes”) and the Nordic Bonds

The ABS Notes and Nordic Bonds are governed by a series of covenants and restrictions typical for such transactions, including (i) the

requirement for the issuer to maintain specified reserve accounts to ensure the payment of interest on the ABS Notes and Nordic

Bonds, (ii) provisions for optional and mandatory prepayments, specified make-whole payments under certain conditions, (iii)

covenants related to recordkeeping, access to information and similar matters, and (iv) compliance with all applicable laws and

regulations.

The ABS Notes have an anticipated repayment date, which occur between May 2029 and May 2031, that precedes their legal final

maturity date. The Company currently expects to repay or refinance each such series on or prior to its anticipated repayment date.

If a series of ABS Notes is not repaid or refinanced by its anticipated repayment date, an accelerated amortization event occurs under

the applicable indenture. In that event, substantially all cash flow generated by the assets securing that series, after payment of senior

fees, hedge amounts, interest and scheduled principal, is applied to repay principal of that series and is not available for distribution to

the Company, and an additional amount accrues on the outstanding notes of that series at a rate of 2% per annum above the applicable

stated interest rate. The failure to repay a series of ABS Notes on its anticipated repayment date is not an event of default under the

applicable indenture, and does not accelerate, or constitute a default under, any other series of ABS Notes, the Credit Facility or the

Nordic Bonds.

The ABS Notes and Nordic Bonds are also subject to customary accelerated amortization events as outlined in the agreements

governing such indebtedness. These events may include failure to maintain specified debt service coverage or loan to value ratios,

failure to meet certain production metrics, certain change of control and management services agreement termination events, and non-

compliance with hedging requirements, as applicable.

The ABS Notes and Nordic Bonds are subject to customary events of default, which may include, as applicable, non-payment of

required interest, principal, or other amounts due, failure to comply with covenants within specified time frames, certain bankruptcy

events, breaches of specified representations and warranties, failure of security interests to be effective, and failure of the indebtedness

to be redeemed upon a change in control event.

Additionally, the Nordic Bonds contain the following financial covenants (i) the leverage ratio shall not exceed 3.5x, (ii) the asset

coverage ratio shall not be less than 1.20 to 1.00, (iii) book equity shall not be less than $500 million, and (iv) liquidity shall not be

less than 25% of the outstanding bonds.

As of June 30, 2026, the Company was in compliance with all covenants related to the ABS Notes and Nordic Bonds.

Future Maturities

The table below represents the Company’s future maturities of its total borrowings as of June 30, 2026, excluding deferred financing

costs, premiums, and discounts, and does not reflect the effect of the anticipated repayment dates of the ABS Notes, which occur

between May 2029 and May 2031:


(in thousands)	Remainder of 2026	2027	2028	2029	2030	Thereafter	Total debt
Debt maturity	$66,171	$97,462	$91,520	$784,535	$163,172	$1,775,869	$2,978,729


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

Interest Expense

The table details the Company’s interest expense for each of the periods presented:


	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	June 30, 2026	June 30, 2025
Interest incurred
Borrowings	$62,437	$57,413	$125,944	$100,107
Other	289	381	1,030	625
Total interest incurred	62,726	57,794	126,974	100,732
Less: Capitalized interest	(1,415)	(1,664)	(2,251)	(1,890)
Interest expense	$61,311	$56,130	$124,723	$98,842

Fair Value

The table below represents the fair value of the Company’s debt structures for the date presented:


	As of
(in thousands)	June 30, 2026
Credit Facility(a)	$195,300
ABS notes(b)	2,263,951
Nordic Bonds(b)	507,921
Other miscellaneous borrowings(a)	37,486
Total fair value of outstanding debt	$3,004,658

(a)Carrying value approximates fair value.

(b)Fair values are measured using a market approach, based upon market rates, which are Level 2 inputs.

Note 11 - Fair Value

The fair value of an asset or liability is defined as the price that would be received for an asset or paid to transfer a liability in the

principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the

measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use

of unobservable inputs. To determine fair value, the Company applies a hierarchy that consists of three input levels. The first and

second levels are regarded as observable, while the third is categorized as unobservable. These input levels may be utilized in the

measurement of fair value as outlined below:


Level 1:	Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2:	Inputs (other than quoted prices included in Level 1) can include the following:

(1) Observable prices in active markets for similar assets or liabilities;

(2) Prices for identical assets or liabilities in markets that are not active;

(3) Directly observable market inputs for substantially the full term of the asset or liability; and

(4) Market inputs that are not directly observable but are derived from or corroborated by observable market data.


Level 3:	Unobservable inputs which reflect the Company’s best estimates of what market participants would use in pricing the asset or liability at the measurement date.

There were no transfers between fair value levels for the three months ended June 30, 2026.

Recurring Fair Value Measurements

Derivatives

The Company measures the fair value of its derivatives in accordance with ASC 820, Fair Value Measurement, utilizing valuation

models that incorporate observable market inputs whenever available. These inputs typically include contractual terms, current market

prices, forward price curves for natural gas, liquids, and oil, relevant interest rate yield curves (such as U.S. Treasury and SOFR), and

volatility factors.

Derivatives are classified within the fair value hierarchy based on the observability of the inputs used in the valuation. The Company’s

fixed price swaps are classified as Level 2 and are valued using third-party discounted cash flow models, which rely on NYMEX


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

futures for natural gas and oil derivatives and OPIS forward curves for NGL derivatives. Interest rate derivatives, also classified as

Level 2, are valued using discounted cash flow models that incorporate contracted notional amounts, market-quoted SOFR yield

curves, and credit-adjusted risk-free rates.

Options, including call options, put options, and collars, are classified as Level 2 and valued using the Black-Scholes option pricing

model. This model incorporates contract terms such as maturity, market parameters including NYMEX and OPIS futures, interest

rates, volatility, and counterparty credit risk. Volatility and other significant inputs are obtained from independent third-party pricing

sources and are subject to monthly verification.

Basis swaps are classified as Level 2 and are valued using third-party models based on forward commodity price curves.

Changes in key inputs, such as volatility, may result in changes to the fair value measurement of the Company’s derivatives.

Assets and liabilities measured at fair value on a recurring basis for the date presented:


	As of June 30, 2026
(in thousands)	Level 1	Level 2	Level 3
Assets
Derivatives	—	121,498	—
Liabilities
Derivatives	—	(516,391)	—
Total net assets (liabilities)	$—	$(394,893)	$—

Nonrecurring Fair Value Measurements

Impairment of Proved Natural Gas & Oil Properties

When impairment occurs, the Company estimates the fair value of the impaired proved natural gas and oil properties through a

discounted cash flow method, which incorporates Level 3 inputs that are not directly observable.

Business combinations

The Company assesses the value of acquired proved properties using an income-based approach as of the acquisition date. This

method is classified as a Level 3 fair value estimate due to its reliance on key assumptions, such as anticipated production volumes,

future commodity pricing, operating costs, weighted average cost of capital (the discount rate) and risk adjustments tailored to the

reserve classification.

Financial Instruments Not Measured at Fair Value

The carrying values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued liabilities, and

other current liabilities approximate fair value due to the highly liquid or short-term nature. The Company’s Credit Facility (see Note

10) has a recorded value that approximates fair market value, as it bears interest at a floating rate that approximates a current market

rate.

Note 12 - Commitments & Contingencies

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. To ensure we meet these commitments, we regularly monitor our proved developed reserves.

The following table summarizes our total undiscounted commitments, compiled using best estimates based on our sales strategy, as of

June 30, 2026.


	Remainder of 2026	2027	2028	2029	2030	Thereafter	Total
Natural gas (MMcf)	173,739	111,254	68,212	54,584	54,584	1,013,206	1,475,579

Litigation and Regulatory Proceedings

The Company is involved in various pending legal issues that have arisen in the ordinary course of business. The Company accrues for

litigation, claims, and proceedings when a liability is both probable and the amount can be reasonably estimated. As of June 30, 2026,

the Company did not have any material amounts accrued related to litigation or regulatory matters.

For any matters not accrued for, it is not possible to estimate the amount of any additional loss or range of loss that is reasonably

possible. However, based on the nature of the claims, management believes that current litigation, claims, and proceedings are not,


Table of Contents	Notes to the Condensed Consolidated Financial Statements (Unaudited)	Diversified Energy

individually or in aggregate, after considering insurance coverage and indemnification, likely to have a material adverse impact on the

Company’s financial position, results of operations, or cash flows.

The Company has no other contingent liabilities that would have a material impact on the Company’s financial position, results of

operations, or cash flows.

Environmental Matters

The Company’s operations are subject to environmental laws and regulations in all the jurisdictions where it operates, and the

Company was in material compliance as of June 30, 2026. However, the Company is unable to predict the impact of additional

environmental laws and regulations that may be adopted in the future, including whether they would adversely affect its operations.

The Company can offer no assurance regarding the significance or cost of compliance associated with any new environmental

legislation or regulation once implemented.

Note 13 - Supplemental Cash Flow Information

The following table summarizes supplemental cash flow information as follows:


	Six Months Ended
(in thousands)	June 30, 2026	June 30, 2025
Supplemental cash flow information:
Cash paid for interest	$118,072	$88,202
Cash paid for income taxes	7,808	1,334
Cash paid for amounts included in the measurement of operating lease liabilities	4,692	2,115
Cash paid for amounts included in the measurement of finance lease liabilities	12,276	8,175
Supplemental disclosure of non-cash transactions:
Issuance of common stock for acquisitions	$—	$253,271
Additions to asset retirement obligations	33,230	127,430
Right-of-use assets obtained in exchange for operating lease liabilities	32,368	27,031
Right-of-use assets obtained in exchange for finance lease liabilities	11,953	21,578

Cash paid for amounts included in the measurement of operating lease liabilities represents total lease payments made during the

period. For finance leases, cash paid for amounts included in the measurement of lease liabilities represents the principal portion of

lease payments. Interest paid on finance leases is included in cash paid for interest.

Note 14 - Subsequent Events

Acquisitions

On July 2, 2026, the Company completed the previously announced acquisition of the equity interests of certain affiliates of Camino

Natural Resources, LLC (“Camino”) that owned certain producing properties and undeveloped acreage for a gross purchase price of

approximately $1.2 billion before customary purchase price adjustments.

Simultaneously with the closing of the acquisition, the producing properties were contributed to an indirect subsidiary of a newly

formed special purpose vehicle (“SPV”), and the Company entered into an agreement with funds and accounts managed by Carlyle

Global Credit Investment Management, LLC (“Carlyle”) pursuant to which the Company and Carlyle hold 40% and 60% of the equity

interests in the SPV, respectively. Carlyle contributed $82 million and the Company contributed $55 million in exchange for their

respective equity interests in the SPV. The Company retained 100% ownership in the undeveloped acreage.

The acquisition of the producing properties was funded by $895 million of ABS notes issued by the SPV and collateralized by the

producing properties, together with the equity contributions of the Company and Carlyle described above. The Company’s acquisition

of the undeveloped acreage, for approximately $170 million, was funded by cash on hand and borrowings under the Company’s Credit

Facility.

Dividends

In August 2026, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $0.29

per share. The dividend is payable on December 31, 2026 to stockholders of record as of the close of business on December 2, 2026.


Table of Contents	MD&A	Diversified Energy

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of

Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the

Condensed Consolidated Financial Statements and the notes thereto included in this report. Unless the context otherwise indicates,

references to “Diversified,” the “Company,” “our,” “we” and “us” (i) for periods until the completion of the U.S. Domestication,

refer to Diversified Energy Company PLC and its consolidated subsidiaries, collectively, and (ii) for periods at or after the completion

of the U.S. Domestication, refer to Diversified Energy Company and its consolidated subsidiaries, collectively. For certain industry

specific terms used in this Quarterly Report on Form 10-Q, please refer to the Glossary of Terms.

In this discussion and analysis of financial condition and results of operations, we address topics such as acquisitions, tax matters,

derivatives, stockholders’ equity, asset retirement obligations, and borrowings. For more detailed information on these areas, refer to

Notes 2, 3, 6, 7, 9, and 10 within the Notes to the Condensed Consolidated Financial Statements. These notes provide comprehensive

disclosures and explanations that support the analysis presented in this section.

Recent Developments

•In July 2026, we completed the acquisition of the equity interests of certain affiliates of Camino Natural Resources, LLC

(“Camino”) that owned certain producing properties and undeveloped acreage for a gross purchase price of approximately $1.2

billion before customary purchase price adjustments. Refer to Note 14 for additional information regarding the Camino

acquisition.

•In June 2026, we divested certain non-core Barnett assets for net proceeds of $116 million after customary purchase price

adjustments. The proceeds received exceeded the carrying amount of the net assets divested resulting in a gain on natural gas and

oil properties and equipment of $19 million.

•In May 2026, we formed DP Red River LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS XII”), to

issue asset-backed securities with a total principal amount of $850 million (the “ABS XII Notes”).

•In April 2026, we acquired certain oil and natural gas wells, leasehold interests and related assets from Sheridan Holding

Company III, LLC (“Sheridan”). We paid net consideration of $236 million, inclusive of customary purchase price adjustments.

•In April 2026, we completed the semi-annual borrowing base redetermination of the Credit Facility. The borrowing base under

the facility was increased from $825 million to $900 million as a result of the increase in collateral from certain assets acquired in

the Sheridan acquisition.

•For the six months ended June 30, 2026, we repurchased 5,978,251 shares, representing approximately 8% of the shares

outstanding as of June 30, 2026.

Market Conditions

Our business continued to be influenced by a range of external factors in 2026, including commodity price volatility, geopolitical

developments, and evolving supply and demand dynamics. We are a U.S. domestic energy producer focused primarily on the

production of natural gas. During the second quarter, Henry Hub natural gas prices remained volatile but averaged approximately

$2.90 per MMBtu, compared with an average of approximately $5.04 per MMBtu in the first quarter, reflecting lower prices as winter-

driven demand eased, partially offset by strong LNG export demand and the onset of summer cooling demand.

Geopolitical tensions, including the conflict involving Iran, the Russia-Ukraine war, and continued instability in the Middle East and

Venezuela, contributed to volatility in global energy markets and underscored the strategic importance of U.S. energy production. In

particular, uncertainty surrounding transit through the Strait of Hormuz contributed to market instability during the quarter.

Domestically, policy shifts continued to support U.S. energy development and LNG export growth, although tariffs on certain

imported steel, aluminum and derivative products introduced additional uncertainty around the cost of some equipment and materials.

Our vertically integrated model helps insulate us from certain direct impacts, and our hedging program continues to play an important

role in mitigating commodity price risk and supporting cash flow durability.

We also continued to monitor inflationary pressures, labor availability and supply chain conditions affecting the broader industry.

Despite ongoing market volatility and policy uncertainty, we remain focused on optimizing our asset base, managing costs and

enhancing operational efficiency. Our integrated model and strategic positioning continue to support our ability to navigate market

fluctuations and capitalize on long-term opportunities in the oil and natural gas sector.


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Results of Operations for the Three Months Ended June 30, 2026 Compared to the Three Months Ended

June 30, 2025

Production Volumes


	Three Months Ended
	June 30, 2026	June 30, 2025	Change	% Change
Net production
Natural gas (MMcf)	80,715	76,638	4,077	5%
NGLs (MBbls)	2,862	2,318	544	23%
Oil (MBbls)	2,685	2,338	347	15%
Total production (MMcfe)(a)	113,997	104,574	9,423	9%
Average daily production (MMcfepd)	1,253	1,149	104	9%
% Natural gas (Mcfe basis)	71%	73%

(a)The basis for converting oil and NGL volumes (MBbls) to natural gas equivalent volumes (MMcfe) is determined by using the

ratio of one Bbl of oil or NGLs to six Mcf of natural gas.

The increase in production volumes for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was

primarily related to the Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second quarter of 2026, respectively, as

well as our continued non-operated development investment. These increases were partially offset by normal production declines.

Commodity Pricing

Commodity prices fluctuate due to a range of factors outside of our control or ability to predict. These include, but are not limited to,

increased natural gas, NGLs and oil production levels that exceed market demand, adverse or unseasonable weather conditions,

geopolitical developments, macroeconomic events, and intensifying competition from other energy sources. Collectively, these

dynamics impact supply and demand, which ultimately determine the realized sales prices for our production. In addition to these

market-driven factors, our realized prices are affected by our derivative activities, commodity trades executed by non-physical trading

entities, and geographic variances in market pricing, including basis differentials. In response to these ongoing and evolving

conditions, we continuously monitor the commodity price environment. This disciplined approach is designed to preserve adequate

liquidity, uphold our financial flexibility, and protect long-term shareholder value across a range of pricing scenarios.

The following table summarizes our average realized sales prices and benchmark prices for the periods presented:


	Three Months Ended
	June 30, 2026	June 30, 2025	$ Change	% Change
Average realized sales prices (before derivative settlements)
Natural gas (Mcf)	$2.03	$2.52	$(0.49)	(19%)
NGLs (Bbls)	29.98	22.71	7.27	32%
Oil (Bbls)	94.67	63.81	30.86	48%
Total (Mcfe)	$4.42	$3.78	$0.64	17%
Average realized sales prices (after derivative settlements)
Natural gas (Mcf)	$2.52	$2.65	$(0.13)	(5%)
NGLs (Bbls)	21.67	22.15	(0.48)	(2%)
Oil (Bbls)	65.96	66.34	(0.38)	(1%)
Total (Mcfe)	$3.88	$3.91	$(0.03)	(1%)
Average benchmark prices
Henry Hub (Mcf)	$2.90	$3.44	$(0.54)	(16%)
Mont Belvieu (Bbls)	33.00	35.87	(2.87)	(8%)
WTI (Bbls)	92.79	63.74	29.05	46%


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Commodity Revenue

The following table reconciles the change in commodity revenue (excluding the impact of hedges settled in cash) by reflecting the

effect of changes in volume and in the underlying prices:


(In thousands)	Natural Gas	NGLs	Oil	Total
Commodity revenue for the three months ended June 30, 2025	$192,931	$52,651	$149,186	$394,768
Volume increase (decrease)	10,274	12,354	22,142	44,770
Price increase (decrease)	(39,509)	20,808	82,863	64,162
Net increase (decrease)	(29,235)	33,162	105,005	108,932
Commodity revenue for the three months ended June 30, 2026	$163,696	$85,813	$254,191	$503,700

Commodity revenue for the three months ended June 30, 2026 increased 28% compared to the three months ended June 30, 2025. The

increase was primarily related to the 17% increase in average realized sales prices, excluding the impact of derivatives settled in cash,

and the 9% increase in sold volumes primarily due to the acquisitions and non-operated development as discussed above.

Commodity Derivatives

To manage our cash flows in a volatile commodity price environment, we utilize commodity derivative contracts that enable us to

secure fixed per-unit sales prices for a portion of our production. As of June 30, 2026, approximately 86% of our production was fixed

through commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity derivatives

settlements on commodity revenue:


	Three Months Ended June 30, 2026
(In thousands, except per unit)	Natural Gas		NGLs		Oil		Total Commodity
(In thousands, except per unit)	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
Excluding hedge impact	$163,696	$2.03	$85,813	$29.98	$254,191	$94.67	$503,700	$4.42
Gain (loss) on commodity derivatives settlements	39,464	0.49	(23,780)	(8.31)	(77,080)	(28.71)	(61,396)	(0.54)
Including hedge impact	$203,160	$2.52	$62,033	$21.67	$177,111	$65.96	$442,304	$3.88


	Three Months Ended June 30, 2025
(In thousands, except per unit)	Natural Gas		NGLs		Oil		Total Commodity
(In thousands, except per unit)	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
Excluding hedge impact	$192,931	$2.52	$52,651	$22.71	$149,186	$63.81	$394,768	$3.78
Gain (loss) on commodity derivatives settlements	10,011	0.13	(1,307)	(0.56)	5,913	2.53	14,617	0.13
Including hedge impact	$202,942	$2.65	$51,344	$22.15	$155,099	$66.34	$409,385	$3.91

Gain (Loss) on Derivatives

The table below sets forth the impact of settlements and fair value adjustments on derivatives for the periods presented:


	Three Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Net gain (loss) on commodity derivatives settlements	$(61,396)	$14,617	$(76,013)	(520%)
Net gain (loss) on interest rate swaps	17	35	(18)	(51%)
Total gain (loss) on settled derivatives(a)	$(61,379)	$14,652	$(76,031)	(519%)
Gain (loss) on fair value adjustments of unsettled derivatives(b)	352,413	154,419	197,994	128%
Total gain (loss) on derivatives	$291,034	$169,071	$121,963	72%

(a)Represents the cash settlement of derivatives that were settled during the period.

(b)Represents the change in fair value of derivatives, net of the carrying value of derivatives that were settled during the period.

The change in this metric was driven by an increase in the fair value of unsettled derivatives due to lower forward commodity prices

primarily for natural gas. This increase was partially offset by a decrease in the value of settled derivatives due to increased oil

commodity prices during the period.


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Operating Expenses


	Three Months Ended June 30,				Total Change		Per Mcfe Change
(In thousands, except per unit data)	2026	Per Mcfe	2025	Per Mcfe	$	%	$	%
Lease operating expenses	$141,242	$1.24	$131,184	$1.25	$10,058	8%	$(0.01)	(1)%
Production taxes	29,660	0.26	23,317	0.22	6,343	27%	0.04	18%
Midstream operating expenses	20,439	0.18	19,361	0.19	1,078	6%	(0.01)	(5)%
Transportation expenses	24,383	0.21	23,769	0.23	614	3%	(0.02)	(9)%
Accretion of asset retirement obligation	13,481	0.12	10,624	0.10	2,857	27%	0.02	20%
General and administrative expense	43,536	0.38	56,661	0.54	(13,125)	(23)%	(0.16)	(30)%
Depreciation, depletion and amortization	103,440	0.91	92,668	0.89	10,772	12%	0.02	2%
(Gain) loss on oil and gas property and equipment	(36,070)	(0.32)	(62,269)	(0.60)	$26,199	(42)%	0.28	(47)%
Total operating expenses	$340,111	$2.98	$295,315	$2.82	$44,796	15%	$0.16	6%

Lease Operating Expense (“LOE”): 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.

The increase in LOE was primarily driven by the acquisition of Canvas in the fourth quarter of 2025. While the total expense

increased, LOE per Mcfe remained consistent.

Production Taxes: 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.

The increase in production taxes and production taxes per Mcfe was primarily related to an increase in severance taxes as a result of an

increase in revenue due to higher commodity prices for oil and NGLs.

Midstream Operating Expense: Midstream operating expenses are costs incurred to operate our owned midstream assets inclusive of

employee and benefit expenses.

The decrease in midstream operating expense per Mcfe was primarily related to maintaining a consistent level of midstream assets

while continuing to increase overall production for the second quarter of 2026, following the acquisition of Canvas in the fourth

quarter of 2025 and Sheridan in the second quarter of 2026. By keeping midstream operations relatively unchanged and expanding

production volumes, the per unit cost of midstream operations declined.

Transportation Expense: Transportation expenses are costs incurred from third-party systems to gather, process and transport our

natural gas, NGLs and oil.

The increase in transportation expense was driven by the Canvas acquisition in the fourth quarter of 2025. The decrease in

transportation expense per Mcfe was primarily related to additional liquids production, as transportation costs are primarily associated

with the movement of natural gas volumes.

Accretion of Asset Retirement Obligation (“Accretion”): Accretion represents the change in the carrying amount of the asset

retirement obligation over time. This expense reflects the gradual recognition of the future costs associated with retiring natural gas

and oil wells.

The increase in accretion was primarily related to the Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second

quarter of 2026, respectively.

General & Administrative Expense (“G&A”): G&A includes overhead, including payroll and benefits for our corporate staff, costs of

maintaining our headquarters, costs of managing our operations, franchise taxes, audit and other professional fees, legal compliance,

equity compensation, and non-recurring costs primarily related to acquisitions.

The decrease in G&A and G&A per Mcfe was the result of significant transaction-related costs from the closing of the Maverick

acquisition in the first quarter of 2025, reflecting the full impact of the administrative synergies realized from this acquisition in 2026.

Depreciation, Depletion & Amortization Expense (“DD&A”): DD&A expenses are non-cash charges that allocate the cost of assets

and natural resources over their useful lives, reflecting their wear and tear, usage, or consumption.

The increase in DD&A was primarily related to a 9% increase in production over the period. The increase in production was due to the

Canvas and Sheridan acquisitions in the fourth quarter of 2025 and second quarter of 2026, respectively, as well as continued non-

operated development.


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Gain (Loss) on Natural Gas and Oil Properties and Equipment: Gains and (losses) on natural gas and oil properties and equipment

represent the difference between cash proceeds and recorded basis of sales of natural gas and oil properties and equipment.

The decrease in this metric was primarily related to decreased acreage sale activity, partially offset by the gain on sale recognized from

the sale of the Barnett assets. For the three months ended June 30, 2026, we recognized a gain of $24 million from acreage sales

compared to $62 million for three months ended June 30, 2025. The sale of the Barnett assets resulted in a gain of $19 million for the

three months ended June 30, 2026. Additionally, the disposal of various property, plant and equipment in the normal course of

business resulted in a loss on natural gas and oil properties and equipment of $7 million for the three months ended June 30, 2026.

Other Income (Expense)


	Three Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Interest expense	$(61,311)	$(56,130)	$(5,181)	9%
Loss on debt extinguishment	(23,882)	—	(23,882)	100%
Other income (expense)	698	835	(137)	(16%)
Total other income (expense)	$(84,495)	$(55,295)	$(29,200)	53%

Interest Expense


	Three Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Interest incurred
Borrowings	$62,437	$57,413	$5,024	9%
Other	289	381	(92)	(24)%
Total interest incurred	62,726	57,794	4,932	9%
Less: Capitalized interest	(1,415)	(1,664)	249	(15)%
Interest expense	$61,311	$56,130	$5,181	9%

The increase in interest expense was primarily related to the issuance of the ABS XI Notes in November 2025 and the issuance of the

ABS XII Notes in May 2026. This increase was partially offset by lower outstanding balances on our existing ABS structures and

Credit Facility.

As of June 30, 2026 and December 31, 2025, total borrowings were approximately $3 billion. For the three months ended June 30,

2026, the weighted average interest rate on borrowings was 7.47% compared to 8.04% for the three months ended June 30, 2025. As

of June 30, 2026, 76% of our borrowings resided in non-recourse, fixed-rate, hedge-protected, amortizing structures compared to 71%

as of June 30, 2025.


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Loss on Debt Extinguishment

In May 2026, the proceeds from the ABS XII Notes were used to repay the outstanding principal of the ABS Maverick Notes and

ABS VI Notes, thereby retiring the ABS Maverick Notes and ABS VI Notes from the Company’s outstanding debt resulting in a loss

on the early retirement of debt of $21 million. Additionally, in June 2026, proceeds from the Barnett assets divestiture were used to

repay the outstanding principal of the ABS IV Notes, thereby retiring the ABS IV Notes from the Company’s outstanding debt and

resulting in a loss on the early retirement of debt of $2 million.

Results of Operations for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June

30, 2025

Production Volumes


	Six Months Ended
	June 30, 2026	June 30, 2025	$ Change	% Change
Net production
Natural gas (MMcf)	157,553	140,106	17,447	12%
NGLs (MBbls)	5,416	3,911	1,505	38%
Oil (MBbls)	5,293	3,121	2,172	70%
Total production (MMcfe)(a)	221,807	182,298	39,509	22%
Average daily production (MMcfepd)	1,225	1,007	218	22%
% Natural gas (Mcfe basis)	71%	77%

(a)The basis for converting oil and NGL volumes (MBbls) to natural gas equivalent volumes (MMcfe) is determined by using the

ratio of one Bbl of oil or NGLs to six Mcf of natural gas.

The increase in production volumes for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was

primarily related to the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of 2025, and the

Sheridan acquisitions in the second quarter of 2026, as well as our continued non-operated development investment, partially offset by

normal production declines.

Commodity Pricing

The following table summarizes our average realized sales prices and benchmark prices for the periods presented:


	Six Months Ended
	June 30, 2026	June 30, 2025	$ Change	% Change
Average realized sales prices (before derivative settlements)
Natural gas (Mcf)	$3.04	$3.01	$0.03	1%
NGLs (Bbls)	27.21	25.76	1.45	6%
Oil (Bbls)	82.24	64.72	17.52	27%
Total (Mcfe)	$4.78	$3.97	$0.81	20%
Average realized sales prices (after derivative settlements)
Natural gas (Mcf)	$2.48	$2.78	$(0.30)	(11%)
NGLs (Bbls)	21.85	23.09	(1.24)	(5%)
Oil (Bbls)	64.20	66.08	(1.88)	(3%)
Total (Mcfe)	$3.83	$3.77	$0.06	2%
Average benchmark prices
Henry Hub (Mcf)	$3.97	$3.55	$0.42	12%
Mont Belvieu (Bbls)	32.35	38.82	(6.47)	(17%)
WTI (Bbls)	82.36	67.58	14.78	22%


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Commodity Revenue

The following table reconciles the change in commodity revenue (excluding the impact of derivatives settled in cash) by reflecting the

effect of changes in volume and in the underlying prices:


(In thousands)	Natural Gas	NGLs	Oil	Total
Commodity revenue for the six months ended June 30, 2025	$421,441	$100,745	$202,001	$724,187
Volume increase (decrease)	52,515	38,769	140,572	231,856
Price increase (decrease)	4,712	7,864	92,717	105,293
Net increase (decrease)	57,227	46,633	233,289	337,149
Commodity revenue for the six months ended June 30, 2026	$478,668	$147,378	$435,290	$1,061,336

The increase in commodity revenue was primarily related to the 20% increase in average realized sales prices, excluding the impact of

derivatives settled in cash, and the 22% increase in sold volumes.

Commodity Derivatives

To manage our cash flows in a volatile commodity price environment, we utilize commodity derivative contracts that enable us to

secure fixed per-unit sales prices for a portion of our production. As of June 30, 2026, approximately 86% of our production was fixed

through commodity derivative contracts over the next twelve months. The tables below set forth the impact of commodity derivatives

settlements on commodity revenue:


	Six Months Ended June 30, 2026
(In thousands, except per unit)	Natural Gas		NGLs		Oil		Total Commodity
(In thousands, except per unit)	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
Excluding hedge impact	$478,668	$3.04	$147,378	$27.21	$435,290	$82.24	$1,061,336	$4.78
Gain (loss) on commodity derivatives settlements	(87,369)	(0.56)	(29,033)	(5.36)	(95,493)	(18.04)	(211,895)	(0.95)
Including hedge impact	$391,299	$2.48	$118,345	$21.85	$339,797	$64.20	$849,441	$3.83


	Six Months Ended June 30, 2025
(In thousands, except per unit)	Natural Gas		NGLs		Oil		Total Commodity
(In thousands, except per unit)	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $	Revenue	Realized $
Excluding hedge impact	$421,441	$3.01	$100,745	$25.76	$202,001	$64.72	$724,187	$3.97
Gain (loss) on commodity derivatives settlements	(31,437)	(0.23)	(10,440)	(2.67)	4,223	1.36	(37,654)	(0.20)
Including hedge impact	$390,004	$2.78	$90,305	$23.09	$206,224	$66.08	$686,533	$3.77

Gain (Loss) on Derivatives

The table below sets forth the impact of settlements and fair value adjustments on derivatives for the periods presented:


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Net gain (loss) on commodity derivatives settlements	$(211,895)	$(37,654)	$(174,241)	463%
Net gain (loss) on interest rate swaps	37	70	(33)	(47%)
Total gain (loss) on settled derivatives(a)	$(211,858)	$(37,584)	$(174,274)	464%
Gain (loss) on fair value adjustments of unsettled derivatives(b)	(45,491)	(77,629)	32,138	(41%)
Total gain (loss) on derivatives	$(257,349)	$(115,213)	$(142,136)	123%

(a)Represents the cash settlement of derivatives that were settled during the period.

(b)Represents the change in fair value of derivatives, net of the carrying value of derivatives that were settled during the period.

The change in this metric was primarily driven by a decrease in the value of settled derivatives due to increased natural gas and oil

commodity prices during the period. This decrease was partially offset by an increase in the value of unsettled derivatives during the

period based on forward commodity pricing movement.


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Operating Expenses


	Six Months Ended June 30,				Total Change		Per Mcfe Change
(In thousands, except per unit data)	2026	Per Mcfe	2025	Per Mcfe	$	%	$	%
Lease operating expenses	$274,210	$1.24	$204,623	$1.12	$69,587	34%	$0.12	11%
Production taxes	60,151	0.27	39,750	0.22	20,401	51%	0.05	23%
Midstream operating expenses	40,675	0.18	37,997	0.21	2,678	7%	(0.03)	(14)%
Transportation expenses	52,951	0.24	50,488	0.28	2,463	5%	(0.04)	(14)%
Accretion of asset retirement obligation	26,729	0.12	18,982	0.10	7,747	41%	0.02	20%
General and administrative expense	85,244	0.38	90,747	0.50	(5,503)	(6)%	(0.12)	(24)%
Depreciation, depletion and amortization	212,005	0.96	167,314	0.92	44,691	27%	0.04	4%
(Gain) loss on oil and gas property and equipment	(134,147)	(0.60)	(63,958)	(0.35)	$(70,189)	110%	(0.25)	71%
Total operating expenses	$617,818	$2.79	$545,943	$3.00	$71,875	13%	$(0.21)	(7)%

Lease Operating Expense (“LOE”): 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.

The increase in LOE was primarily driven by the acquisitions of Maverick in the first quarter of 2025, Canvas in the fourth quarter of

2025, and Sheridan in the second quarter of 2026. Specifically, the increase in LOE per Mcfe was primarily related to a greater

exposure to liquids production. Areas with higher liquids output tend to incur elevated operating costs, although they also benefit from

higher realized prices.

Production Taxes: 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.

The increase in production taxes and production taxes per Mcfe was primarily related to an increase in severance and property taxes as

a result of an increase in revenue due to higher commodity prices and the additional value of added liquids revenue due to the

acquisitions discussed above, as well as additional property taxes on assets acquired.

Midstream Operating Expense: Midstream operating expenses are costs incurred to operate our owned midstream assets inclusive of

employee and benefit expenses.

The decrease in midstream operating expense per Mcfe was primarily related to maintaining a consistent level of midstream assets

while increasing overall production for the first six months of 2026, following the acquisitions of Maverick in the first quarter of 2025,

Canvas in the fourth quarter of 2025, and Sheridan in the second quarter of 2026. By keeping midstream operations relatively

unchanged and expanding production volumes, the per unit cost of midstream operations declined.

Transportation Expense: Transportation expenses are costs incurred from third-party systems to gather, process and transport our

natural gas, NGLs and oil.

The increase in transportation expense was driven by the Maverick and Canvas acquisitions in the first and fourth quarters of 2025,

respectively. The decrease in transportation expense per Mcfe was primarily related to additional liquids production, as transportation

costs are primarily associated with the movement of natural gas volumes. The Maverick and Canvas acquisitions led to an increase in

the proportion of liquids in our overall production mix.

Accretion of Asset Retirement Obligation (“Accretion”): Accretion represents the change in the carrying amount of the asset

retirement obligation over time. This expense reflects the gradual recognition of the future costs associated with retiring natural gas

and oil wells.

The increase in accretion was primarily related to the acquisitions of Maverick in the first quarter of 2025, Canvas in the fourth quarter

of 2025, and Sheridan in the second quarter of 2026.

General & Administrative Expense (“G&A”): G&A includes overhead, including payroll and benefits for our corporate staff, costs of

maintaining our headquarters, costs of managing our operations, franchise taxes, audit and other professional fees, legal compliance,

equity compensation, and non-recurring costs primarily related to acquisitions.

The decrease in G&A and G&A per Mcfe was the result of significant transaction-related costs from the closing of the Maverick

acquisition in the first quarter of 2025, in addition to recognizing administrative synergies and leveraging our existing infrastructure in

2026, which offset the acquisition-related headcount increases.


Table of Contents	MD&A	Diversified Energy

Depreciation, Depletion & Amortization Expense (“DD&A”): DD&A expenses are non-cash charges that allocate the cost of assets

and natural resources over their useful lives, reflecting their wear and tear, usage, or consumption.

The increase in DD&A was primarily related to a 22% increase in production over the period. The increase in production was due to

the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of 2025, and the Sheridan acquisition

in the second quarter of 2026, as well as continued non-operated development.

Gain (Loss) on Natural Gas and Oil Properties and Equipment: Gains and (losses) on natural gas and oil properties and equipment

represent the difference between cash proceeds and recorded basis of sales of natural gas and oil properties and equipment.

The increase in this metric was primarily related to increased acreage sales, as we strategically pursue the divestiture of select non-

core, undeveloped acreage within our operating portfolio. For the six months ended June 30, 2026, we recognized a gain of $125

million from acreage sales compared to $64 million for six months ended June 30, 2025. The sale of the Barnett assets resulted in a

gain of $19 million for the six months ended June 30, 2026. Additionally, the disposal of various wells and property, plant and

equipment in the normal course of business resulted in a loss on natural gas and oil properties and equipment of $10 million for the six

months ended June 30, 2026.

Other Income (Expense)


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Interest expense	(124,723)	(98,842)	(25,881)	26%
Loss on debt extinguishment	(23,882)	(26,971)	3,089	(11%)
Other income (expense)	1,246	1,103	143	13%
Total other income (expense)	$(147,359)	$(124,710)	$(22,649)	18%

Interest Expense


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Interest incurred
Borrowings	$125,944	$100,107	$25,837	26%
Other	1,030	625	405	65%
Total interest incurred	126,974	100,732	26,242	26%
Less: Capitalized interest	(2,251)	(1,890)	(361)	19%
Interest expense	$124,723	$98,842	$25,881	26%

The increase in interest expense was primarily related to the issuance of the ABS X Notes in February 2025, the assumption of the

ABS Maverick Notes as a result of the Maverick acquisition in March 2025, the issuance of the Nordic Bonds in April 2025, the

issuance of the ABS XI Notes as a result of the Canvas acquisition in November 2025, and the issuance of the ABS XII Notes in May

2026. This increase was partially offset by lower outstanding balances on our existing ABS structures and Credit Facility.

As of June 30, 2026 and December 31, 2025, total borrowings were $3 billion, respectively. For the six months ended June 30, 2026,

the weighted average interest rate on borrowings was 7.58% compared to 7.82% for the six months ended June 30, 2025. As of June

30, 2026, 76% of our borrowings resided in non-recourse, fixed-rate, hedge-protected, amortizing structures compared to 71% as of

June 30, 2025.

Loss on Debt Extinguishment

In February 2025, the proceeds from the ABS X Notes were used to repay the outstanding principal of the ABS I & II Notes and Term

Loan I, retiring these from our outstanding debt and resulting in a loss on debt extinguishment of $27 million.

In May 2026, the proceeds from the ABS XII Notes were used to repay the outstanding principal of the ABS Maverick Notes and

ABS VI Notes, thereby retiring the ABS Maverick Notes and ABS VI Notes from the Company’s outstanding debt resulting in a loss

on the early retirement of debt of $21 million. Additionally, in June 2026, proceeds from the Barnett assets divestiture were used to

repay the outstanding principal of the ABS IV Notes, thereby retiring the ABS IV Notes from the Company’s outstanding debt and

resulting in a loss on the early retirement of debt of $2 million.


Table of Contents	MD&A	Diversified Energy

Income Tax Benefit (Expense)

The effective tax rates can be materially impacted by the recognition of the marginal well tax credit available to qualified producers as

reflected in our effective tax rates for the six months ended June 30, 2026 and 2025. The federal government provides these credits to

incentivize companies to continue operating lower-output wells during periods of low prices. This support helps sustain production,

preserve the jobs associated with these operations, and ensures that communities continue to receive state and local tax income. Such

revenue is vital for funding schools, law enforcement, social initiatives, and other essential public services.

The provision for income taxes in the Condensed Consolidated Statements of Comprehensive Income (Loss) is summarized below:


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Income (loss) before taxation	$73,875	$(21,441)	$95,316	(445)%
Income tax benefit (expense)	13,065	(3,464)	16,529	(477)%
Effective tax rate	(17.7)%	(16.2)%

Tax benefit for the six months ended June 30, 2026 represented a favorable change compared to an expense for the six months ended

June 30, 2025. The change was primarily driven by the movement in income (loss) before taxation and the recognition of marginal

well credits.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash generated from operating activities and available capacity under our Credit Facility. As of

June 30, 2026, we had approximately $678 million of liquidity, consisting of $8 million of cash on hand and $669 million of

availability under our Credit Facility.

When we acquire producing assets, we typically complement our Credit Facility with long-term, fixed-rate, amortizing, asset-backed

debt secured by certain natural gas and oil assets. This asset-backed debt is non-recourse to the Company. Our financing strategy is

designed to align with the long-life nature of our assets, provide access to lower-cost capital and support a clear path to leverage

reduction through scheduled principal payments. For larger acquisitions requiring greater capital outlays, we have raised, and may in

the future raise, additional capital through equity offerings to maintain an appropriate leverage profile.

We closely monitor our working capital to ensure it remains sufficient to support our strategic initiatives, business operations,

dividend payments to shareholders and repurchases of common stock. In addition, we maintain a disciplined approach to managing

operating costs and allocating capital resources, with a focus on investments that support our objectives and generate appropriate

returns.

Capital expenditures were $98 million for the six months ended June 30, 2026, compared to $89 million for the six months ended June

30, 2025. The increase in capital expenditures was primarily related to the development of new wells via a non-operated development

agreement that came with the undeveloped locations acquired in the Maverick acquisition. We expect to meet our capital expenditure

needs for the foreseeable future through cash flows from operations and existing liquidity. Our future capital requirements will depend

on several factors, including scope of development activities, the pace of our growth, commodity price fluctuations, and future

acquisitions.

The majority of our current capital expenditures are directed toward upstream and midstream operations, including pipelines and

compression. The remaining expenditures are focused on production optimization, technology, plugging requirements, fleet, emissions

reduction initiatives and development activities.

Looking ahead, we intend to support stable cash flows by maintaining our hedging strategy and capitalizing on market opportunities to

enhance the hedged commodity prices of our production. We also plan to preserve our strategic advantages through purposeful

growth, supported by a disciplined capital expenditure program. We believe this approach will help us maintain access to low-cost

financing for acquisitive growth while preserving appropriate leverage and sufficient liquidity.

With respect to other known current obligations, we believe 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 working capital requirements, debt service

obligations, and planned capital expenditures, as well as our ability to pay dividends, will depend on our future operating performance.

Our future operating performance will be affected by prevailing economic conditions in the natural gas and oil industry, along with

other financial and business factors, some of which are beyond our control.

For additional information regarding borrowings and debt covenants, refer to Note 10 in the Notes to the Condensed Consolidated

Financial Statements.


Table of Contents	MD&A	Diversified Energy

Liquidity


	As of
(In thousands)	June 30, 2026	December 31, 2025
Cash and cash equivalents	$8,238	$29,697
Available borrowings under the Credit Facility(a)	669,322	304,912
Liquidity	$677,560	$334,609

(a)Represents available borrowings under the Credit Facility of $705 million as of June 30, 2026 less outstanding letters of credit of

$35 million as of such date. Represents available borrowings under the Credit Facility of $340 million as of December 31, 2025

less outstanding letters of credit of $35 million as of such date.

Cash Flows


	Six Months Ended
(In thousands)	June 30, 2026	June 30, 2025	$ Change	% Change
Net cash provided by operating activities	$257,516	$165,138	$92,378	56%
Net cash (used in) investing activities	(101,506)	(395,870)	294,364	(74%)
Net cash (used in) provided by financing activities	(197,735)	305,374	(503,109)	(165%)
Net change in cash, cash equivalents and restricted cash	$(41,725)	$74,642	$(116,367)	(156%)

Net Cash Provided by Operating Activities

The change in operating activities was primarily related to increased revenues as a result of increased liquids pricing and production

stemming from the Maverick acquisition in the first quarter of 2025, the Canvas acquisition in the fourth quarter of 2025, and the

Sheridan acquisition in the second quarter of 2026, as well as our continued non-operated development investment and higher liquids

commodity pricing.

Net Cash (Used in) Investing Activities

The change in investing activities was primarily related to decreased acquisition activity in 2026, which included the Sheridan

acquisition, as compared to the same period in 2025, which included the Summit and Maverick acquisitions. Additionally, we received

increased cash proceeds from the sale of the Barnett assets and undeveloped acreage during the six months ended June 30, 2026.

Net Cash (Used in) Provided by Financing Activities

The change in financing activities was primarily related to a decrease in borrowing activity in 2026, when we received proceeds from

the tap-on offering of Nordic Bonds and the issuance of the ABS XII Notes, as compared to 2025, when we received proceeds from

the issuance of the ABS X Notes as well as our equity offering, partially offset by hedge modification payments and deferred

financing costs incurred in connection with the ABS X transaction. Additionally, during 2026, we increased share repurchases as part

of our stock repurchase program as compared to 2025.

Off-Balance Sheet Arrangements

We may enter into off-balance sheet arrangements and transactions that give rise to material off-balance sheet obligations. As of June

30, 2026, our material off-balance sheet arrangements and transactions include operating service contractual obligations of $295

million and letters of credit outstanding against our Credit Facility of $35 million. Refer to Contractual Obligations for additional

information.

As of June 30, 2026, there are no other transactions, arrangements or other relationships with unconsolidated entities or other persons

that are reasonably likely to materially affect our liquidity or availability of capital resources.


Table of Contents	MD&A	Diversified Energy

Contractual Obligations

We have various contractual obligations in the normal course of our operations and financing activities. Significant contractual

obligations as of June 30, 2026 were as follows:


(In thousands)	Remainder of 2026	2027	2028	2029	2030	Thereafter	Total
Recorded contractual obligations
Accounts payable	$129,539	$—	$—	$—	$—	$—	$129,539
Accrued liabilities	166,485	—	—	—	—	—	166,485
Borrowings(a)	66,171	97,462	91,520	784,535	163,172	1,775,869	2,978,729
Operating leases	5,945	10,069	8,931	3,750	2,663	510	31,868
Finance leases	12,254	23,150	19,519	13,691	6,308	1,240	76,162
Asset retirement obligation(b)	13,559	29,035	26,365	51,191	19,484	3,503,668	3,643,302
Other liabilities(c)	88,219	28,770	—	—	—	—	116,989
Off-Balance Sheet contractual obligations
Firm transportation(d)	15,286	21,131	15,476	11,237	5,050	226,888	295,068
Total contractual obligations	$497,458	$209,617	$161,811	$864,404	$196,677	$5,508,175	$7,438,142

(a)The future maturities presented reflect scheduled principal amortization under the terms of each instrument and does not reflect

the effect of the anticipated repayment dates of the ABS Notes, which occur between May 2029 and May 2031.

(b)Represents our asset retirement obligation on an undiscounted basis. On a discounted basis the liability is $906 million as of June

30, 2026 as presented in the Consolidated Balance Sheets.

(c)Represents taxes payable, deferred tax liability, noncurrent derivative liabilities, and other current and noncurrent liabilities.

(d)Represents reserved capacity to transport gas from production locations through pipelines to the ultimate sales meters.

For more detailed information on asset retirement obligations and borrowings refer to Notes 9 and 10 within the Notes to the

Condensed Consolidated Financial Statements.

Litigation and Regulatory Proceedings & Environmental Matters

For Information regarding legal proceedings and environmental matters, refer to Note 12 to the Notes to the Condensed Consolidated

Financial Statements.

Critical Accounting Estimates

There have been no material changes to the Company’s critical accounting estimates from those disclosed in the Company’s Annual

Report on Form 10-K for the year ended December 31, 2025.


Table of Contents	Form 10-Q	Diversified Energy Company

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our

potential exposure to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in natural gas, NGLs

and oil prices, as well as interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather

indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our

ongoing market risk exposures.

Commodity Price Risk

Our revenues are primarily derived from the sale of natural gas, NGLs, and oil production, subjecting us to commodity price risk.

Commodity prices for natural gas, NGLs and oil can be volatile and may fluctuate due to relatively small changes in supply, weather

conditions, economic conditions, and government actions. For the six months ended June 30, 2026, our natural gas, NGLs, and oil

revenue was $479 million, $147 million, and $435 million, respectively. Based on production, natural gas, NGLs and oil revenue for

the six months ended June 30, 2026 would have increased or decreased by approximately $48 million, $15 million, and $44 million,

respectively, for each 10% increase or decrease in prices.

To mitigate the risk of fluctuations in commodity prices, we enter into derivatives. The total volumes hedged through the use of these

instruments vary from period to period. Generally our objective is to hedge approximately 60% to 80% of anticipated production

volumes for the next 12 months, at least 50% for months 13 to 24, and a minimum of 30% for months 25 to 36. For additional

information regarding derivatives, refer to Note 6 in the Notes to the Condensed Consolidated Financial Statements.

By removing price volatility from a significant portion of our expected production through 2028, we have mitigated, but not

eliminated, the potential effects of changing prices on operating cash flow for those periods. While these derivative contracts help

mitigate the negative effects of falling commodity prices, they also limit the benefits we would receive from increases in commodity

prices.

As of June 30, 2026, the fair value of our natural gas derivatives was a net liability of $289 million, NGLs derivatives were in a net

liability position of $44 million, and our oil derivatives were in a net liability position of $63 million. For the six months ended June

30, 2026, a 10% fluctuation in commodity prices would have a corresponding impact of approximately $29 million, $4 million, and $6

million on natural gas, NGLs and oil derivatives, respectively.

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates. Our borrowings primarily consist of fixed-rate amortizing

notes and a variable rate Credit Facility as illustrated below.


	As of June 30, 2026
(in thousands)	Borrowings	Interest Rate(a)
ABS Notes, Nordic Bonds, & other(b)	$2,783,429	7.68%
Credit Facility	$195,300	6.88%

(a)The interest rate on the ABS Notes, Nordic Bonds, and other notes payable represents the weighted average fixed rate of the

notes, while the interest rate presented for the Credit Facility represents the floating rate as of June 30, 2026.

(b)Includes $20 million in notes payable issued by a third party financial institution in November 2024 collateralized by two natural

gas processing plants and various natural gas compressors and related support equipment in the Central Region, as of June 30,

2026.

For additional information regarding the Company’s borrowings, refer to Note 10 in the Notes to the Condensed Consolidated

Financial Statements.

For the six months ended June 30, 2026, a 100 basis point adjustment in the borrowing rate for the Credit Facility would result in a

corresponding annual effect on interest expense of approximately $2 million. This represents a reasonably possible change in interest

rate risk.

We strive to maintain a prudent balance of floating and fixed-rate borrowing exposure, particularly during uncertain market

conditions. As part of our risk mitigation strategy, we occasionally enter into swap arrangements to adjust our exposure to floating or

fixed interest rates, depending on changes in the composition of borrowings in our portfolio. Consequently, the total principal hedged

through the use of derivatives varies from period to period.

As of June 30, 2026, the fair value of our interest rate swaps represents an asset of $0.1 million. For additional information regarding

derivatives, refer to Note 6 in the Notes to the Condensed Consolidated Financial Statements.


Table of Contents	Form 10-Q	Diversified Energy Company

Counterparty & Customer Credit Risk

We are exposed to counterparty and customer credit risk from the hedging and sale of our natural gas, NGLs and oil.

Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we only enter into commodity contracts

with counterparties that are creditworthy financial institutions deemed by us to have acceptable credit strength and competence.

Counterparty non-performance risk is considered in the valuation of our derivative instruments, but has not had an impact on the value

of our derivatives. We also attempt to limit our exposure to non-performance by any single counterparty. As of June 30, 2026, our

commodity contracts and derivative instruments were spread among 14 counterparties.

For additional information regarding derivatives, refer to Note 6 in the Notes to the Condensed Consolidated Financial Statements.

Accounts receivable from customers represent amounts due for the purchase of these commodities, and their collectability depends on

the financial condition of each customer. We review the financial condition of customers before extending credit and generally do not

require collateral to support their accounts receivable. As of June 30, 2026, we had no customer that comprised over 10% of our total

accounts receivable from customers. Net of the applicable allowance for credit losses, our accounts receivable from customers were

$343 million as of June 30, 2026.

The Company is also exposed to credit risk from joint interest owners, which are entities that own a working interest in the properties

operated by the Company. Joint interest receivables are classified under accounts receivable, net, in the Condensed Consolidated

Balance Sheets. The Company has the ability to withhold future revenue payments to recover any non-payment of joint interest

receivables. As of June 30, 2026, our joint interest receivables, net of the applicable allowance for credit losses, were $65 million.

Accounts receivable are current, and the Company believes these net receivables are collectible.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined in U.S. Securities Exchange Act of 1934, as amended

(“Exchange Act”) Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our reports filed or

submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and

forms of the SEC, and such information is accumulated and communicated to our management, including our Chief Executive Officer

and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Chief Executive Officer and

Chief Financial Officer, with the participation of management, have evaluated the effectiveness of the Company’s disclosure controls

and procedures in relation to Exchange Act Rule 13a-15(b), and have concluded that the Company’s disclosure controls and

procedures were effective as of June 30, 2026.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026, which materially

affected, or were reasonably likely to materially affect, our internal control over financial reporting.


Table of Contents	Form 10-Q	Diversified Energy Company

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various routine legal proceedings, disputes and claims arising in the ordinary course of our business, including those

that arise from the interpretation of federal and state laws and regulations affecting the crude oil and natural gas exploration and

development industry, personal injury claims, title disputes, royalty disputes, contract claims, contamination claims relating to crude

oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third

parties and no longer part of our current operations. While the ultimate outcome of the pending proceedings, disputes or claims, and

any resulting impact on us, cannot be predicted with certainty, we believe that none of these matters, if ultimately decided adversely,

will have a material adverse effect on our financial condition, results of operations or cash flows.

In April 2023, the Department of Environmental Protection for the Commonwealth of Pennsylvania issued an administrative order to

our subsidiary with respect to certain above ground facilities. We have completed the remedial actions required by the order and the

Commonwealth of Pennsylvania has proposed a civil penalty of approximately $1.9 million, which the Company is reviewing and

engaging with the Department on.

Except as provided above, there have been no material developments with respect to the information previously reported under Part I,

Item 3. “Legal Proceedings” of our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 1A. Risk Factors

There have been no material changes to the Company’s “Risk Factors” previously disclosed in Part I, Item 1A of our Annual Report

on Form 10-K for the year ended December 31, 2025, except as provided below.

We have limited historical experience as an operator of development programs.

We have initiated an operated development program which will require us to devote additional financial, technical and operational

resources to drilling and completion activities. Development activities generally require us to commit capital substantially in advance

of realizing production and cash flows, which may increase the variability of returns compared to our historical acquisition strategy.

Although we have drilled wells in various basins in the past and we have highly skilled personnel with significant drilling and

completion experience through prior acquisitions, including our Chief Operating Officer, who previously oversaw the drilling program

at Maverick Natural Resources, our historical business model has primarily focused on the acquisition, optimization and operation of

existing producing assets.

Success in development programs depends upon effective well planning, capital allocation, execution of drilling and completion

operations, reservoir evaluation, leasing, permitting, and project management. Executing these operations will require us to engage

and rely upon drilling contractors, completion crews and other oilfield services providers, whose availability, performance and pricing

are outside our control. Our development activities may not achieve expected results, and our returns could be adversely affected if

development costs increase, reserve estimates are revised downward, or wells fail to perform as anticipated. In addition, we cannot

provide assurance that unproved property acquired by us will be profitably developed, that wells drilled in connection with our

development activities will be productive, or that we will recover all or any portion of our investment in such unproved property or

wells.

Our development activities are subject to risks and uncertainties that are not present, or are present to a lesser degree, in our

existing producing asset base.

Historically, a substantial portion of our business has consisted of acquiring and operating existing producing assets. As we increase

our investment in drilling and development activities, we are exposed to additional risks, including:

•dry holes, or wells that are productive but do not produce sufficient volumes to recover drilling and completion and operating

costs, or to achieve targeted returns;

•drilling or completion delays, or the curtailment or cancellation of planned activity;

•cost overruns and increases in drilling and completion costs;

•shortages of or delays in obtaining qualified personnel or equipment, including rigs, pressure pumping crews, tubulars, sand,

water, chemicals and other equipment or critical services;

•unexpected geological conditions;

•drilling hazards and mechanical failures;

•well control incidents, blowouts, fires and environmental events;

•leasing or title problems;

•delays in obtaining permits and regulatory approvals, and environmental, health and safety requirements applicable to drilling

and completion operations;

•adverse weather and surface access constraints;

•inability to secure or dispose of water used in drilling and completion operations; and


Table of Contents	Form 10-Q	Diversified Energy Company

•insufficient takeaway, gathering or processing capacity.

Any of these events may result in increases in costs, delays in production, lower-than-expected recoveries, impairment of capital

invested in development projects and reduced returns.

Estimates of reserves, drilling inventory and future development opportunities are inherently uncertain and may prove to be

inaccurate.

The identification of drilling locations and estimates of reserves, estimated ultimate recovery, production profiles and future economic

returns depend upon complex geological, geophysical, engineering and economic analyses. These analyses require assumptions

regarding reservoir characteristics, hydrocarbon recovery, well performance, commodity prices, capital costs and operating expenses.

In evaluating undeveloped acreage, we may rely on seismic data, well logs, core information, production data from offset operators,

geologic models, type curves and other technical information. The interpretation of such information is inherently uncertain.

Actual drilling results may differ materially from our expectations. Wells that we believe are commercially attractive based on seismic

interpretation or geologic analysis may fail to achieve anticipated production rates, recoveries or economic returns. New information

obtained through drilling and production activities may require us to revise reserve estimates, development plans, drilling inventories

and expected future cash flows.

Because drilling and completion occurs over an extended period, the economics of our development activities are subject to changes in

commodity prices between the time we commit capital and the time any resulting production is sold. If we are unable to execute

drilling and completion programs successfully, such failure could materially and adversely affect our business, results of operations,

and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Common Stock

Following are our monthly share repurchases of common stock for the quarter ended June 30, 2026:


Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
April	—	$—	—	2,766,636
May	—	$—	—	2,766,636
June	944,887	$13.43	944,887	1,821,749
Total	944,887	$13.43	944,887

All repurchases of common stock were made using cash on hand and liquidity at the time of purchase. Our repurchases of common

stock may occur through open market purchases, private transactions, or pursuant to a Rule 10b5-1 trading plan.

On February 25, 2026, the Board approved a stock repurchase program (the “2026 Repurchase Program”) authorizing the Company to

repurchase up to 7,800,000 shares. The 2026 Repurchase Program authorizes the repurchase of common stock through March 1, 2027.

Repurchases of common stock under the program may be made, from time to time, in privately negotiated transactions, in open market

transactions, or by other means, including through trading plans intended to qualify under Rule 10b-18 and/or Rule 10b5-1 of the U.S.

Securities Exchange Act of 1934, as amended. The amount and timing of any repurchases made under the program will be in the

Company’s sole discretion and will depend on a variety of factors, including legal requirements, market conditions, other investment

opportunities, available liquidity, and the prevailing market price of the common stock. The program does not obligate the Company

to repurchase any dollar amount or number of shares of common stock, and the program may be suspended or discontinued at any

time at the Company’s discretion.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

During the three months ended June 30, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading

arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.


		Page
Part I	Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
Part II	Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
	Signatures	46


	Page
Condensed Consolidated Financial Statements (Unaudited)	5
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Comprehensive Income (Loss)	6
Condensed Consolidated Statements of Changes in Stockholders' Equity	7
Condensed Consolidated Statements of Cash Flows	8
Notes to the Condensed Consolidated Financial Statements	9


Exhibit No.			Incorporated by reference			Filed	Furnished
Exhibit No.		Description	Form	Exhibit	Filing Date	Herewith	Only
2.1	†	Securities Purchase Agreement dated May 6, 2026, by and among Camino Natural Resources, LLC, Camino Natural Resources Intermediate HoldCo, LLC, Land Run Minerals II, LLC, the other sellers named therein and Diversified Gas & Oil Corporation	8-K File No. 001-41870	2.1	5/12/2026
3.1		Amended and Restated Certificate of Incorporation of Diversified Energy Company	8-K File No. 001-41870	3.1	11/24/2025
3.2		Amended and Restated Bylaws of Diversified Energy Company	8-K File No. 001-41870	3.2	11/24/2025
4.1	†	Base Indenture dated May 13, 2026, by and among DP Red River LLC, as Issuer, Diversified ABS VI Upstream LLC, Oaktree ABS VI Upstream LLC, MNR ABS Issuer I, LLC, and MNR ABS Agent Corp, as Guarantors, and UMB Bank, N.A., as Indenture Trustee and Securities Intermediary	8-K File No. 001-41870	4.1	5/19/2026
4.2	†	Series 2026-1 Supplement dated May 13, 2026, by and among DP Red River LLC, as Issuer, Diversified ABS VI Upstream LLC, Oaktree ABS VI Upstream LLC, MNR ABS Issuer I, LLC, and MNR ABS Agent Corp, as Guarantors, and UMB Bank, N.A., as Indenture Trustee	8-K File No. 001-41870	4.2	5/19/2026
10.1	†	Third Amendment to Second Amended and Restated Revolving Credit Agreement dated as of April 30, 2026				ü
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				ü
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				ü
32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002					ü
101		Interactive Data File. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


†	Certain schedules and attachments have been omitted. The registrant hereby undertakes to provide further information regarding such omitted materials to the Securities and Exchange Commission upon request.


DIVERSIFIED ENERGY COMPANY
(Registrant)

/s/ Bradley G. Gray
Bradley G. Gray
President and Chief Financial Officer