Diversified Energy Company PLC First Quarter 2023 Results

Consistent with our strategy, we continued our consolidation efforts through another accretive acquisition in our Central Region, which also contributed to our undeveloped acreage position. We continue to advance our initiatives to realize value from these assets through outright sales, advantageous joint ventures, or other partnership constructs that will provide a catalyst to unlock upside to our net asset value and drive the opportunity for organic, no-cost production growth.

We remain focused on generating free cash flow to provide dividends and service our amortizing debt while evaluating accretive growth opportunities that provide enhanced scale and synergies. We have built a sizable and resilient Company, and believe our intrinsic value per share significantly exceeds our current share price, offering a compelling value proposition for our current and future shareholders."

Operations and Finance Update

Production and Asset Integration

The Company recorded exit rate production in March 2023 of 145 Mboepd (872 MMcfepd) and delivered 1Q23 average net daily production of 139 Mboepd (833 MMcfepd), both reflecting the partial impact of the Tanos II acquisition. The Company continues to integrate these assets into its Smarter Asset Management programs, and expects to fully complete this work within 2Q23.

Margin and Total Cash Expenses per Unit

Diversified's robust hedge portfolio significantly protects the Company's revenues from the global commodity macro deterioration that began in late 2022 and continues into 2023. Additionally, the Company's vertical integration strategy provides greater control over its expenses to preserve high cash margins.

Cash Margins^(b) of 54% (56% unhedged) reflect the benefit of the Company's hedge optimization efforts, lower commodity-price linked expenses and contribution from the recently acquired high-margin Tanos II assets. Price-linked operating expenses drove meaningful reductions in unit production taxes, midstream expense, certain third-party gathering and transportation costs.

Adding production during the quarter without additional administrative requirements from Tanos II effectively held relatively flat Base Lease Operating Expense per unit and reduced Adj. General and Administrative expenses^(f) per unit during the period.

¹ 1Q23 excludes $(0.28)/Boe ($(0.05)/Mcfe) and 4Q22 excludes $(0.34)/Boe ($(0.06)/Mcfe) of expenses attributable to Next LVL Energy

Values may not sum due to rounding

Results of Hedging and Current Financial Derivatives Portfolio

Diversified's use of hedges to minimize commodity price risk and match stable production with stable revenues underpinned the Company's average 1Q23 hedge floor price of $3.79/Mcf, 4% higher than the average settled price for NYMEX Henry Hub During the quarter^(d). Diversified's hedging strategy continues to advantageously position the Company for the balance of the year with remaining 2023 average natural gas hedge floors of $3.79/Mcf currently situated at a ~35% premium to current strip pricing^(d) and a ~55% premium to the $2.48/Mcf active contract price^(d).

Having proactively established its 2023 and a majority of its 2024 hedge portfolio, Diversified is focused on adding hedges to 2025 and beyond where forward natural gas prices remain strong. The table below represents the Company's full-year hedge positions at May 1, 2023:

Environmental Update

Emissions Reductions Activity

During the quarter, Diversified completed the Company's previously announced deployment of handheld emissions devices in the Central Region and has performed more than 4,000 emissions inspections to date in the region, with initial no-leak rates of 90% of sites surveyed consistent with the Company's Appalachian portfolio.

Upstream and midstream emissions detection activities in the Appalachian region continue to progress, with upstream emissions testing via handheld devices yielding a consistent no-leak rate of

Asset Retirement Progress

Through Diversified's wholly owned asset retirement subsidiary Next LVL Energy, the Company has safely retired 56 wells, of which 26 were operated by Diversified and 30 were owned or operated by third-party companies or state plugging programmes. Next LVL Energy's ability to provide full-scope asset retirement and well services continues to benefit the Company's asset retirement goals and capabilities achieved through scale and efficiencies as one of the largest asset retirement service providers in the Appalachian region.

Diversified expects to retire 200+ operated wells in 2023 including the 43 operated wells (including 26 by Next LVL Energy) retired year-to-date.

Solar Field Development

During the past year, the Company has been in discussions with several large solar project developers in the United States. These projects involve using surface acres owned by the Company as part of the land used to house solar panels and equipment for renewable power development. These acreage positions have primarily been located in Texas and Southern Appalachia to date, with some parcels located near the Barnett operating area. Diversified continues to have ongoing discussions with a number of solar project developers across its operational areas to realize value for acreage that would otherwise not be in any near-term development plans, anticipating additional partnership agreements to be consummated in the future.