second quarter 2026
Filed Aug 5, 2026Diversified Energy reported $504M of Total Commodity Revenue, $248M of Net Income, $240M of Adjusted EBITDA and $115M of Adjusted Free Cash Flow for the three months ended June 30, 2026.
The Company reported positive operating cash flow and adjusted free cash flow, declared a $0.29 per share dividend, repurchased $93M of shares year to date, and ended the quarter with $678M of credit facility availability and unrestricted cash. The reported Adjusted EBITDA Margin declined to 52% from 64% in the prior-year table.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Average productionother | 1,253 MMcfepd (209 Mboepd) | – | – |
| Production exit rateother | 1,275 MMcfepd (213 Mboepd) | – | – |
| Total Commodity Revenueother | $504M | – | – |
| Net Incomeother | $248M, inclusive of gain on non-cash unsettled derivatives | – | – |
| Adjusted EBITDAnon-GAAP | $240M | – | – |
| Operating Cash Flowother | $89M | – | – |
| Adjusted Free Cash Flownon-GAAP | $115M | – | – |
| Capital Expendituresother | $40M | – | – |
| Average daily productionother | 1,225 MMcfepd (204 Mboepd) | – | – |
| Per unit revenuesother | $4.22/Mcfe ($25.32/Boe) | – | – |
| Adjusted EBITDA Marginnon-GAAP | 52% | – | – |
| Average realized priceother | $3.88/Mcfe ($23.28/Boe) | – | – |
| Other revenueother | $0.12/Mcfe ($0.72/Boe) | – | – |
| Proceeds from divestituresother | $0.22/Mcfe ($1.32/Boe) | – | – |
| Total revenue and proceeds from divestitures, excluding Next Level Energyother | $4.22/Mcfe ($25.32/Boe) | – | – |
| Lease operating expenseother | $1.19/Mcfe ($7.14/Boe) | – | – |
| Production taxesother | $0.26/Mcfe ($1.56/Boe) | – | – |
| Midstream operating expenseother | $0.18/Mcfe ($1.08/Boe) | – | – |
| Transportation expenseother | $0.21/Mcfe ($1.26/Boe) | – | – |
| Total operating expenseother | $1.84/Mcfe ($11.04/Boe) | – | – |
| Employees, administrative costs and professional feesother | $0.25/Mcfe ($1.50/Boe) | – | – |
| Adjusted Operating Cost per Unitnon-GAAP | $2.09/Mcfe ($12.54/Boe) | – | – |
| Year-to-date per unit revenuesother | $4.54/Mcfe ($27.24/Boe) | – | – |
| Year-to-date Adjusted EBITDA Marginnon-GAAP | 60% | – | – |
Capital returns
- Year to date returns of ~$136M to shareholders, including $93M in share repurchases
- $93M in share repurchases, representing a 14% shareholder return yield
- 2Q26 dividend: $0.29 per share declared
What drove it
- Closing of the Camino acquisition expanded the Company's Oklahoma operating position.
- The Company introduced a one-rig operated development program in Oklahoma focused on high-return organic cash flow growth.
- The Company completed the strategic sale of non-core, low-margin Barnett and Arkansas assets for $147M.
- Midstream and Transportation expenses decreased during the three months ended June 30, 2026 compared to prior period levels.
- Non-operated development is expected to offset approximately 50% of the Company's portfolio production decline, representing an estimated average contribution of approximately 12,500 Boepd during 2026.
- The Company's quarterly production mix was approximately 71% natural gas, 15% natural gas liquids, and 14% oil, with approximately 66% of production volumes from the Central region and 34% from Appalachia.
Concerns
- Adjusted EBITDA Margin was 52% for the three months ended June 30, 2026, compared with 64% in the prior-year table.
- Per unit revenues were $4.22/Mcfe ($25.32/Boe), compared with $4.75/Mcfe ($28.50/Boe) in the prior-year table.
- Production taxes were $0.26/Mcfe ($1.56/Boe), compared with $0.22/Mcfe ($1.32/Boe) in the prior-year table.
- Employees, administrative costs and professional fees were $0.25/Mcfe ($1.50/Boe), compared with $0.23/Mcfe ($1.38/Boe) in the prior-year table.
- Reported Net Income was inclusive of gain on non-cash unsettled derivatives.
What to watch
- Execution and capital requirements of the one-rig operated development program in Oklahoma.
- Integration of the Canvas, Sheridan and Camino acquisitions.
- The Company identified more than 450 economic drilling locations at $65/Bbl oil and $3.25/MMBtu natural gas pricing.
- Synergy capture and the anticipated improvement in per unit expenses.
- Further portfolio optimization, including acreage sales and asset divestitures.
Balance sheet and cash flow
- Liquidity: $678M of credit facility availability and unrestricted cash as of June 30, 2026
- ABS principal reduction: Retired $233M in outstanding debt under certain ABS notes in 1H26
- Leverage ratio: 2.45x as of June 30, 2026
- Consolidated debt consists of ~76% in deleveraging non-recourse ABS notes
- Operating Cash Flow: $89M
- Adjusted Free Cash Flow: $115M
- Capital Expenditures: $40M
Analysis
Diversified reported $504M of Total Commodity Revenue, $248M of Net Income, $240M of Adjusted EBITDA, $89M of Operating Cash Flow and $115M of Adjusted Free Cash Flow for the three months ended June 30, 2026. Average daily production was 1,253 MMcfepd (209 Mboepd), while production exit rate was 1,275 MMcfepd (213 Mboepd). For the six months ended June 30, 2026, average daily production was 1,225 MMcfepd (204 Mboepd).
The production base remained predominantly natural gas, at approximately 71% of quarterly volumes, with NGLs at 15% and oil at 14%. The Central region accounted for approximately 66% of volumes and Appalachia for 34%. Management highlighted the portfolio's shallow decline profile, while its non-operated development platform is expected to offset approximately 50% of portfolio production decline and contribute an estimated average of approximately 12,500 Boepd during 2026.
Quarterly per unit revenues were $4.22/Mcfe ($25.32/Boe), versus $4.75/Mcfe ($28.50/Boe) in the prior-year table. Adjusted EBITDA Margin was 52%, versus 64%. Average realized price was $3.88/Mcfe ($23.28/Boe), versus $3.91/Mcfe ($23.46/Boe). Cost execution showed lower lease operating expense, midstream operating expense, transportation expense and total operating expense per unit versus the prior-year table, while production taxes and employees, administrative costs and professional fees were higher. Adjusted Operating Cost per Unit was unchanged at $2.09/Mcfe ($12.54/Boe).
Capital allocation combined debt retirement, shareholder distributions, acquisitions, development investment and divestitures. The Company retired $233M of outstanding debt under certain ABS notes in 1H26, reported a 2.45x leverage ratio, and reported $678M of credit facility availability and unrestricted cash as of June 30, 2026. Year-to-date returns to shareholders were ~$136M, including $93M in repurchases, and the Company declared a $0.29 per share 2Q26 dividend. The sale of non-core Barnett Shale and Arkansas assets generated $147M of proceeds, while the Company stated that year-to-date acreage sales reached $126M.
The release did not provide formal forward financial guidance. Instead, management emphasized a disciplined one-rig operated development program in Oklahoma, where it identified more than 450 economic drilling locations at $65/Bbl oil and $3.25/MMBtu natural gas pricing. The Company also described the Camino transaction as a bolt-on to its Oklahoma position and identified integration of the Canvas, Sheridan and Camino acquisitions, operating-cost synergies, non-operated development contributions and continued portfolio optimization as central execution items.
Management, verbatim
The Diversified team delivered another quarter of strong operational and financial performance, while maintaining our disciplined approach to capital allocation.
Rusty Hutson, Jr., CEO of Diversified
Our differentiated business model continues to generate consistent and reliable cash flow, enabling us to strengthen the balance sheet through debt reduction, return capital to shareholders through our dividend and share repurchase programs, and invest in high-return opportunities that support long-term value creation.
Rusty Hutson, Jr., CEO of Diversified
We have never been better positioned to deliver durable cash flow, create long-term shareholder value, and build the foundation for the next 25 years of growth.
Rusty Hutson, Jr., CEO of Diversified
Not in the filing
stated, not guessed- GAAP operating income
- GAAP gross margin
- GAAP diluted EPS
- Non-GAAP EPS
- Income-tax expense and tax rate
- Total cash balance separate from credit facility availability
- Total debt balance
- Net debt
- Formal forward financial guidance
- Prior-quarter comparisons for reported quarterly financial and operating metrics
- Prior-year comparisons for total commodity revenue, net income, Adjusted EBITDA, operating cash flow, Adjusted Free Cash Flow and capital expenditures
- Segment revenue
- A complete financial-statement presentation and reconciliations beyond the provided filing text
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.