Diversified Energy Company(DEC) - 2023 Q4 - Annual Report

Financial Performance - Net income for FY 2023 was $760 million, including$688 million from tax-effected, non-cash unsettled derivative fair value adjustments, while adjusted EBITDA was $543 million, generating free cash flow of$219 million[5]. - Net income for the year ended December 31, 2023, was $759.7 million, a significant increase from a net loss of$620.6 million in 2022[41]. - Total revenue for 2023 was $868.3 million, down from$1.9 billion in 2022, while total revenue inclusive of settled hedges was $1.046 billion, slightly up from$1.024 billion in 2022[43]. - Adjusted EBITDA for 2023 was $542.8 million, representing an increase from$503 million in 2022, with an adjusted EBITDA margin of 52% compared to 49% in the previous year[41][43]. - The net gain on commodity derivative instruments for 2023 was $178.1 million, compared to a loss of$895.8 million in 2022[43]. - Free cash flow for the year ended December 31, 2023, was $219,096, an increase from$217,727 in 2022, but a decrease from $227,334 in 2021[44]. - Pro forma adjusted EBITDA for 2023 was$549,258, reflecting adjustments for acquisitions, compared to $574,414 in 2022[46]. Production and Operations - Record average net daily production reached 821 MMcfepd, with a December exit rate of 775 MMcfepd, reflecting a peer-leading consolidated corporate production decline rate of approximately 10$180 million in capital to shareholders in 2023 through dividends and strategic share repurchases[21]. - The updated capital allocation framework aims to reduce leverage to a target range of 2.0x to 2.5x, with planned debt repayments of over $200 million during 2024[17][24]. - Net debt as of December 31, 2023, was$1,284,843, down from $1,435,449 in 2022, and up from$1,010,005 in 2021[46]. - Total debt as of December 31, 2023, was $1,324,848, a decrease from$1,498,166 in 2022 and an increase from $1,041,665 in 2021[46]. - Cash paid for interest increased to$116,784 in 2023 from $83,958 in 2022, reflecting higher financing costs[44]. - Deferred cash payments of approximately$90 million to Oaktree will be paid over an 18-month term with an 8% annual interest rate[41]. Sustainability and Environmental Impact - The company achieved a 33% reduction in Scope 1 methane intensity to 0.8 MT CO2e/MMcfe from 1.2 in 2022, seven years ahead of its 2030 goal[5]. - The company anticipates issuing its 2023 Sustainability Report in April 2024, reflecting its commitment to sustainability and operational efficiency[5]. - The company is recognized for its sustainability leadership and aims to deliver reliable free cash flow while generating shareholder value[30]. Strategic Initiatives - The company announced a strategic acquisition of working interests from Oaktree Capital for an estimated gross purchase price of $410 million, expected to increase average working interest in the acquired assets by approximately 100$0.29 per share, equating to $1.16 annually, sustainable for at least three years, while reallocating approximately$110 million annually towards other capital allocation needs[17].