(Clarifies the dividend has been cut when taking into account Diversified Energy’s share consolidation in 2023.)
Diversified Energy Co PLC on Tuesday reported a swing to a profit on the back of commodity derivative settlements, but posted a de facto lower dividend due a share consolidation last year.
The Alabama, US-based oil and gas production company focused on the Appalachia and central region in the US said it swung to a pretax profit of $1.00 billion in 2023 from a loss of $799.5 million in 2022.
Revenue including settled hedges climbed 2.2% to $1.05 billion in 2023 from $1.02 billion.
Notably, Diversified Energy reported a net gain of $178.1 million on commodity derivative settlements in 2023, compared to a $895.8 million net loss in 2022.
Natural gas production edged up 0.3% to 256.4 million cubic feet from 255.6 mmcf. Natural gas liquid output jumped 12% to 5.8 million barrels in 2023 from 5.2 million barrels a year prior.
The company declared a final dividend of 29 US cents per share, compared to 4.38 cents a year before. However, Diversified last year conducted a share consolidation of 20 shares into 1, meaning the 2023 final dividend effectively is down 67% from 2022.
The final dividend brings the total dividend for 2023 to $1.16, compared to 17.25 cent in 2022 pre-consolidation, also effectively a 66% reduction.
Diversified Energy shares were down 9.0% to 840.50 pence each on Tuesday afternoon in London.
Diversified Energy said that it is recalibrating its fixed dividend payout to align with the current equity market dynamics, peer trends, prevailing commodity prices and expected future allocations.
‘We understand the importance of this decision to our shareholders and do not take the decision lightly. By focusing our capital allocation on a fixed dividend level that is competitive with the industry and the market at large, we are prioritizing the acceleration of our balance sheet de-leveraging, with over $200 million in debt repayments during 2024, creating financial flexibility and a strong foundation to maximize long-term value creation for our shareholder base,’ it said.
Looking ahead, Chief Executive Officer Rusty Hutson said: ‘Diversified’s differentiated stewardship business model will thrive amid the backdrop of rising global energy demand, consolidation in the US energy markets, and enhanced expectations for sustainably produced energy.’
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