Diversified Energy shares increased 0.2% to 120.5p following the company’s Q1 2022 trading statement, which reported a 6% rise in dividend payouts to 4.2c per share year-on-year.
The energy firm commented that it had an exit rate production of 136 mdoedp, with an average Q1 2022 production of 134 mboepd inclusive of temporary weather-related impacts.
Diversified Energy noted a realised 48% cash margin and a 70% unhedged cash margin, with an increase in realised prices slightly offsetting elevated price-linked variable expenses.
The company said it had hedged additional 2023 and 2024 natural gas volumes, with an average NYMEX floor price at 53% and 26% higher, against the company’s portfolio average as of 17 March 2022.
The group also confirmed a 2.2x net debt and hedged adjusted EBITDA leverage ratio on 31 March 2022 pro forma for recent acquisitions.
Diversified Energy further highlighted a liquidity of $350 million.
The firm noted its acquisitions of Central Region producing assets in East Texas, which added scale to operations, alongside the acquisition of Central Region midstream and processing facility assets, which complemented vertical integration to raise cash margins through higher pricing and lower expenses.
The company also acquired a second Appalachian well plugging company, expanding its capacity by 33% with two added crews, bringing the group’s total number to eight.
“Following our four Central Region acquisitions in the second half of 2021, I’m pleased with the progress we are making to integrate and optimise these assets while adding to their scale and vertical integration to reduce costs,” said Diversified Energy CEO Rusty Hutson.
“Mindful of cash flow and cash operating margins, we also added to our hedge positions to capture value from the higher forward commodity price curve.”
