Financial Performance - Net income for FY 2023 was $760 million, including $688 million from tax-effected, non-cash unsettled derivative fair value adjustments, while adjusted EBITDA was $543 million, generating free cash flow of $219 million[5]. - Net income for the year ended December 31, 2023, was $759.7 million, a significant increase from a net loss of $620.6 million in 2022[41]. - Total revenue for 2023 was $868.3 million, down from $1.9 billion in 2022, while total revenue inclusive of settled hedges was $1.046 billion, slightly up from $1.024 billion in 2022[43]. - Adjusted EBITDA for 2023 was $542.8 million, representing an increase from $503 million in 2022, with an adjusted EBITDA margin of 52% compared to 49% in the previous year[41][43]. - The net gain on commodity derivative instruments for 2023 was $178.1 million, compared to a loss of $895.8 million in 2022[43]. - Free cash flow for the year ended December 31, 2023, was $219,096, an increase from $217,727 in 2022, but a decrease from $227,334 in 2021[44]. - Pro forma adjusted EBITDA for 2023 was $549,258, reflecting adjustments for acquisitions, compared to $574,414 in 2022[46]. Production and Operations - Record average net daily production reached 821 MMcfepd, with a December exit rate of 775 MMcfepd, reflecting a peer-leading consolidated corporate production decline rate of approximately 10%[5]. - The corporate decline rate in production was approximately 10%, with Q4 2022 production at ~134 Mboepd compared to adjusted Q4 2023 production of ~122 Mboepd[41]. - The acquisition is projected to add production of 122 MMcfepd, representing a 15% increase compared to previously announced 2023 average daily production[8]. - The company plans to continue its strategy of acquiring existing, long-life assets to improve operational performance and environmental sustainability[30]. Debt and Capital Allocation - The company reduced outstanding debt by approximately 15% since interim results, returning $180 million in capital to shareholders in 2023 through dividends and strategic share repurchases[21]. - The updated capital allocation framework aims to reduce leverage to a target range of 2.0x to 2.5x, with planned debt repayments of over $200 million during 2024[17][24]. - Net debt as of December 31, 2023, was $1,284,843, down from $1,435,449 in 2022, and up from $1,010,005 in 2021[46]. - Total debt as of December 31, 2023, was $1,324,848, a decrease from $1,498,166 in 2022 and an increase from $1,041,665 in 2021[46]. - Cash paid for interest increased to $116,784 in 2023 from $83,958 in 2022, reflecting higher financing costs[44]. - Deferred cash payments of approximately $90 million to Oaktree will be paid over an 18-month term with an 8% annual interest rate[41]. Sustainability and Environmental Impact - The company achieved a 33% reduction in Scope 1 methane intensity to 0.8 MT CO2e/MMcfe from 1.2 in 2022, seven years ahead of its 2030 goal[5]. - The company anticipates issuing its 2023 Sustainability Report in April 2024, reflecting its commitment to sustainability and operational efficiency[5]. - The company is recognized for its sustainability leadership and aims to deliver reliable free cash flow while generating shareholder value[30]. Strategic Initiatives - The company announced a strategic acquisition of working interests from Oaktree Capital for an estimated gross purchase price of $410 million, expected to increase average working interest in the acquired assets by approximately 100%[7][10]. - The company plans to maintain a fixed quarterly dividend of $0.29 per share, equating to $1.16 annually, sustainable for at least three years, while reallocating approximately $110 million annually towards other capital allocation needs[17].
Diversified Energy Company(DEC) - 2023 Q4 - Annual Report