Diversified Energy Company PLC (LSE:DEC, NYSE:DEC, FRA:DG20), the Alabama-based gas producer listed in London and New York, is to start drilling its own wells, a departure from the acquisition-led model that built the company.
The company said it would launch a one-rig operated development programme in Oklahoma in the second half of this year, spending $35 million to $50 million.
It expects the drilling to have a material impact on production in 2027.
Diversified has identified more than 450 economic drilling locations in Oklahoma, equivalent to more than 20 years of work at a one-rig pace.
Second quarter adjusted earnings before interest, tax, depreciation and amortisation fell 14% to $240 million.
The margin on those earnings narrowed to 52% from 64%, reflecting softer realised prices and lower proceeds from asset sales.
Total commodity revenue rose to $504 million from $395 million, helped by the Canvas, Sheridan and Camino acquisitions.
Net income of $248 million included a $352 million non-cash gain on unsettled derivatives, the contracts used to hedge future prices.
Average production was 1,253 million cubic feet of gas equivalent a day, of which 71% was natural gas.
The company sold non-core assets in the Barnett Shale and Arkansas for $147 million, part of a disposal programme that has raised more than $500 million since the start of 2023.
Diversified has returned about $136 million to shareholders this year, including $93 million of buybacks covering roughly 9% of its shares.
A second-quarter dividend of 29 cents a share was declared.
Net debt stood at $2.83 billion at the end of June, leaving leverage at 2.45 times earnings, within its target range.
Full-year guidance points to adjusted earnings of $960 million to $1.01 billion and adjusted free cash flow of about $440 million.
Production is expected to average 1,180 million to 1,210 million cubic feet equivalent a day.
Rusty Hutson Jr, chief executive, said Diversified was entering a new phase of growth, with the drilling programme complementing joint ventures with operators including Continental Resources and Mewbourne.
Those non-operated partnerships are expected to offset about half of the natural decline in the company's production this year.
