Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was approximately $500 million, with adjusted EBITDA reaching a record $286 million, resulting in an EBITDA margin of 66% [18][19] - Free cash flow for the quarter was $144 million, impacted by approximately $9 million in non-recurring and transaction costs [19] - Net debt stood at approximately $2.5 billion, with a leverage ratio improved by 20% since year-end 2024, achieving a target level of 2 to 2.5 times net debt to EBITDA [19] Business Line Data and Key Metrics Changes - Daily production exit rate for September was approximately 1.14 BCF per day, with quarterly production averaging over 1.13 BCF per day, primarily generated in the central region [17][18] - The company has significantly transformed and strengthened its operations through acquisitions, with year-over-year growth in EBITDA and cash flow nearly doubling [6][25] Market Data and Key Metrics Changes - The company has seen a nearly 400% increase in daily trading volume since executing the initial dual listing approximately 20 months ago, with U.S. ownership expanding to over 65% of shares outstanding [11] - The market for oil and natural gas producers has remained dynamic throughout 2025, presenting both challenges and opportunities [8] Company Strategy and Development Direction - The company focuses on optimizing cash flow from low-decline energy assets while pursuing growth through strategic acquisitions and disciplined capital allocation [4][6] - The recent acquisition of Maverick Natural Resources and the anticipated closing of Canvas Energy are expected to enhance operational leverage and cash flow generation [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate consistent cash flow and deliver strong operational results, emphasizing the importance of disciplined capital allocation [7][25] - The company anticipates generating between $900-$925 million in adjusted EBITDA and over $440 million in adjusted free cash flow for the full year [25] Other Important Information - The company is moving its primary equity listing to the New York Stock Exchange and re-domiciling to a U.S. corporate entity, which is expected to enhance trading liquidity and increase exposure to U.S. investors [10][11] - A partnership with the Governor of West Virginia has led to the establishment of a fund for the retirement of wells, addressing a significant liability for the company [12][13] Q&A Session Summary Question: What are the uses of free cash flow considering the current leverage? - Management indicated that the best use of cash will be determined based on the situation, with a focus on share repurchases due to undervaluation, while also considering growth opportunities [31][32] Question: Can you discuss the Mountain State Plug-in Fund and its potential replication in other states? - Management highlighted the fund as a win-win solution for the industry and the state, expressing hope for similar arrangements in other states, particularly in Appalachia [33][36] Question: What is the current state of the ABS market? - Management noted a high appetite for ABS financing, which has become popular in the industry, providing a low cost of capital for growth [38][40] Question: Can you provide an update on joint development agreements in the Western Anadarko assets? - Management reported strong returns from ongoing joint development in the Cherokee Basin, with plans for future evaluations of acreage for potential new agreements [42][44] Question: Will there be adjustments to the asset retirement obligation (ARO) figure in Q4? - Management clarified that while there will be no immediate accounting adjustment to the ARO, the Plug-in Fund addresses a significant portion of the liability [45][46]
Diversified Energy Company(DEC) - 2025 Q3 - Earnings Call Transcript