The need to replenish and decommission will always be there for DEC but I don't look in detail. Because the great performance is nothing much to do with the company but is sector-specific in natural gas (not oil). I hold DEC as I do every small pure gas play I can find and they are all up nicely regardless of quality or stage... Similar ticker DELT is a pure explorer with no earnings steaming ahead with partners like Shell, while SQZ is in takeover talks ahead of a drill. IOG a producer will have more production and drills planned this year. IGAS I don't hold is steeming upwards. It's all happening in natural gas!

A good time to sell is often close to winter but Russia will add extreme volatility despite all these companies' lowly valued. A complete cutoff nordstreem 1 will mean more LNG imports from the US benefitting DEC through higher US natural gas prices (NGAS I think).

It maybe all about timing your sells right in the sector and potentially buying something more defensive (I am a seller now into the winter). Adding now when SP is high is probably a silly risk we don't need to take

Hopefully the share price will become more sensible now???

Diversified Energy Company PLC

("Diversified" or the "Company")

Trading Statement and Annual Results Call Details

Diversified Energy Company PLC (LSE:DEC) is pleased to announce the following operations and trading update confirming 2022 results are in line with market expectations. Diversified will release its 2022 full-year results and host an investor call on 21 March 2023.

Recent Operating and Financial Highlights

• Annual production of 135 Mboepd (808 MMcfepd), up 14% vs. 2021

◦ 4Q22 average of 134 Mboepd (805 MMcfepd), which included weather-related downtime

◦ 4Q22 average of 138 Mboepd (826 MMcfepd) excluding weather-related downtime(a)

◦ December 2022 exit rate of 141 Mboepd (846 MMcfepd) excluding weather-related downtime(a)

• Total Cash Expenses(b) per unit of $10.41/Boe ($1.73/Mcfe)

• Full Year Cash Margins(c) of 50%

• ~85% of 2023 production hedged(d) at an average natural gas price of $3.63/Mcf(e)(f)

◦ Represents ~27% price premium and ~70% increase in coverage from year-end 2021

◦ Average hedge price ~3% above current NYMEX strip for 2023(g)

• ~2.3x Net Debt / Adjusted EBITDA(h) leverage ratio as of 31 December 2022, pro forma for recent acquisitions

Recent Environmental, Social and Governance ("ESG") Highlights

• Asset-Retirement Progress / Update on Next LVL Energy ("Next LVL"), DEC's well retirement subsidiary:

◦ Next LVL continues to be awarded retirement contracts from third-party operators and state orphan well programs, with >150 wells contracted in 2023

◦ DEC retired 200 wells (incl. 72 by Next LVL) during 2022, up 47% vs. 2021 (136 wells)

• Emission Reduction Initiatives:

◦ Conducted ~174,000 handheld emissions surveys of upstream Appalachian assets during 2022, completing upstream surveys ahead of original commitment

▪ Achieved no-leak rate on >90% of surveys upon completion of site visit

▪ Completed 2+ surveys on ~95% of producing sites; no-leak rate of >95%

◦ Completed LiDAR aerial surveillance over ~11,000 miles of midstream assets

▪ 75% of verified leaks repaired; progressing additional repairs

Rusty Hutson, Jr., CEO of the Company, commented:

"Once again, the team delivered another exceptional year for our stakeholders. In a year marked by volatility underpinned by significant geopolitical activities, we once again delivered on our strategic goals of generating strong cash flows, reducing emissions, and providing tangible value to our stakeholders.

"Protecting our cash flow and, in turn, our dividend and debt payments have always been core to our strategy. We opportunistically capture higher natural gas prices as we add additional hedge protection. We begin 2023 again on solid footing, with ~85% of our natural gas production hedged at an average floor price of $3.63/Mcf, with downside protection ~27% better or $0.78 higher per Mcf compared to the values reported as of year-end 2021.

"In 2022, we navigated a challenging inflationary environment while maintaining strong cash margins by vertically integrating the assets we acquire and realising synergies, including establishing our Next LVL asset retirement business. Our investment in expertise and equipment positions us as one of the largest full-service well retirement and related activity providers in Appalachia. Importantly, we safely and efficiently retired over 200 wells during the year and ahead of our 2023 target date to reach this milestone. Our progress highlights our long-standing commitment to be a responsible steward of our assets from acquisition to end of life, and we are now using our expertise to help third parties retire their wells, including orphan wells within certain states in which we operate."

"We recognize that energy-company stakeholder expectations continue to evolve and now include energy security and affordability in harmony with expectations around ESG, and Diversified remains committed to and has a track record of responsibly and sustainably producing our assets. Our investments in emissions measurement and tracking technologies were integral to Diversified being awarded the Gold Standard from the United Nations Oil and Gas Methane Partnership. As one of only five U.S.-based companies to receive that achievement, we are proud of this accomplishment and its affirmation of the team's commitment to our stated emission reduction-related goal."



Today with our more than 1,500-people-strong organization, we achieved strong financial and operational results. I would like to thank this group of talented individuals for their dedication as we continue our work in 2023 and beyond."

Guess that’s where the heavy heavy hedging comes in? Market has been ignoring or discounting that maybe?

This is looking interesting. It has been on a 45% negative slope since the Autumn 140==>100 where it is on a 13% yield. I am still uncomfortable with the level of the well sealing programme as they are liable for sealing all the wells on the property they own not just the wells they are currently operating. They are slowly hoovering up the total liability to cap and seal the wells used by the US gas Industry over the last 120 years

They are working to seal leaking wells - some of which were abandoned by "wildcatters" 50 years ago and aren't even on the maps but there is a real drive to cut Methane emissions because of the environmental impact so there is also an unquantifiable risk here - a bit like buying asbestos product manufacturers and picking up the employers liability costs 30 years later. Diageo still pays out to Thalidomide Trust as Grand Met bought the Distillers Company who had Distillers Pharma who happened to have the distribution rights in the UK

13% yield is very tempting but the risk that one Court decision in the US could make the company worthless is less attractive. At the very best, they are buying production and they are buying an indefinite liability to monitor and manage thousands of wells that they have never received any benefit from. They are a "sin eater" for the industry.

Thoughts?

European investors appear to to be more ESG sensitive than their US counterparts. Shunning dirty oil and gas companies. Amongst the majors Shell, BP and Total for example are rated around 50% lower than their US counterparts Exxon Mobil and Chevron. As a result no hope for the European minors. Great opportunity currently to exploit the mispricing. Not going to last for much longer I'd say. 10% yields are going to be very attractive once inflation slips lower.