Diversified Energy Company PLC (LSE:DEC, NYSE:DEC) has signed a gas supply agreement with a major LNG facility located on the Gulf Coast.
Under the terms of the agreement, Diversified will deliver approximately 40 billion cubic feet (Bcf) of natural gas over the next three years, starting in November.
The pricing for the contract will be indexed to Gulf Coast market rates.
It helps the company as it continues to manage commodity price risk, supporting profit margins.
Diversified told investors it has also expanded its hedging portfolio for natural gas, covering 2025 to 2027, with an average NYMEX price of $3.45 per million British thermal units (MMBtu).
"This supply agreement to a Gulf Coast LNG export facility is a great example of the market's recognition of Diversified's reliable natural gas production and operational efficiency while providing another lever for the Company to enhance margins and deliver consistent cash flows,” chief executive Rusty Hutson said in a statement.
“In line with the company's strategy to reduce commodity price risk, we believe this agreement, along with tactically adding to our 2025-2027 hedge position during the recent natural gas price strength, will help us to provide consistent, robust cash margins.”
Hutson added: “The [LNG] agreement not only reflects the critical need and strong global demand for natural gas but also the importance natural gas plays in powering global economies for decades to come.
“We look forward to advancing our relationships with Gulf Coast LNG export facilities that share our commitment to building a future of energy abundance, affordability, and security."
DEC expects to provide additional details on its hedging in its upcoming third-quarter 2024 trading statement.