Diversified Energy Company PLC Essential to the Energy Transition Delivering Sustainable Shareholder Value Capital Markets Day 2021 DIV.energy
DISCLAIMER The information contained in this document (the Presentation) has been prepared by Diversified Accordingly, no assurance can be given that the forward-looking statements will prove to be accurate Energy Company PLC…
CELEBRATING 20 YEARS WITH A NEW LOOK Diversified Energy Company Our new name reflects who we are and represents our long-standing business and growth strategy underpinned by clean- burning natural gas. Diversified is an important…
AGENDA 8:00 8:05 Welcome & Introduction Session 8:05 8:40 DEC: CEO and Board Perspectives 1 8:40 9:45 ESG: Environmental Focus 9:45 10:15 Q&A for Session 1 10:15 10:30 BREAK 10:30 10:50 ESG: Social & Governance Focus 10:50…
Corporate Overview Rusty Hutson, Jr Chief Executive Officer DIV.energy
POSITIONED TO WIN IN AN EVOLVING ENERGY INDUSTRY Poised to Thrive During the Energy Transition Natural gas focused model provides affordable, reliable and clean natural gas to meet the worlds growing energy demands while delivering…
DIVERSIFIED TODAY: A 20-YEAR JOURNEY 2001 - 2021 We set it up from day one to focus on free cash flow, and as weve grown, that strategy hasnt changed. Rusty Hutson, Jr. 2001 2017(a) 2021 Diversified Resources Diversified Gas & Oil…
A DIFFERENTIATED ENERGY COMPANY (LSE: DEC) Appalachian Basin Considering Equity Share Asset Legend: US-Based London-Listed Upstream Dual-Listing Assets Equity Shares Pennsylvania Midstream Ohio W. Virginia Central Region…
DRIVING VALUE GENERATION THROUGH ACCRETIVE ACQUISITIONS 2 Billion in acquisitions Location of Diversified Assets since 2017 IPO Headquarters Legend: Asset Acquisition Corporate Acquisition Assets in OH, PA Eclipse…
CONTINUED EXPANSION INTO THE CENTRAL REGION Combined Central Position: Production: 50 MBoepd PDP Reserves: 180 MMBoe Initial Entry Cumulative Indigo & Tanos Accretive Impact Initial Central Region position within the Cotton Valley /…
PERSPECTIVE OF THE CURRENT M&A MARKET Market Expectations Opportunity Set Price Environment Investor preference for consolidation Fragmented operator landscape across Unique consolidation strategy proven within the E&P landscape US…
ESTABLISHING A UNIQUE PRESENCE AMONG M&A PARTICIPANTS Proven consolidator with a demonstrated ability to access funding throughout the commodity price cycle to grow our stewardship model STRATEGIC PRIVATE OPERATOR Developers…
UNLOCKING VALUE FROM UNDEVELOPED RESOURCE Diversified holds 8.6 million acres of leasehold Appalachia: o 7.3 million acres o Both conventional and unconventional reservoirs o Project economic drilling at sustained higher gas…
FAVORABLE US NATURAL GAS FUNDAMENTALS More measured YOY gas production growth and gas rig count recovery Low Markets demanding lower reinvestment rates by public E&Ps which reduces natural gas (and Gas production growth Rig count…
Diversified and Natural Gas: a Board Perspective Sandy Stash Independent Non-Executive Director, Chair of Sustainability & Safety Committee DIV.energy
PERSONAL PERSPECTIVES: WHY DIVERSIFIED Recognition of Diversifieds Differentiated Model A financially sound model that supports customers and communities energy and socio-economic needs And plays an essential role in the energy…
DIVERSIFIEDS ESG JOURNEY 2019 2020 2021 Progressing the Platform Initiated Project Fresh program to reduce emissions Appointed new VP of ESG & Sustainability Established our Baselines Expanded EH&S staff focused on safety and air…
IMPORTANCE OF NATURAL GAS: GLOBALLY World Primary Energy Consumption by Energy Source(a) Quadrillion Btu Essential 300 Projections History Petroleum & As global energy consumption increases, 250 other liquids(b) Renewables…
IMPORTANCE OF NATURAL GAS: DOMESTICALLY Energy Consumption by Fuel(a) Quadrillion Btu Essential Projections History 50 45 Petroleum & Natural gas remains an essential element in 40 other liquids(b) Natural Gas meeting total…
NATURAL GAS SUPPORTING EMISSIONS REDUCTIONS IN ELECTRIC POWER SECTOR US Electric Power Sector: Natural Gas Use Increasing while Emissions Are Decreasing Projections All GHG Total Power History Emissions CO2 Methane Sector CO2…
IMPORTANCE OF NATURAL GAS: REGIONALLY Clean Reliable Abundant Affordable Efficient 2020 Statistics(a) Regional Significance Collectively, for these 9 states Appalachian Basin 77% 15% 36% of 2020 Total US Natural Gas…
ENVIRONMENTAL AND CLIMATE CONSIDERATIONS IN EVERY ASPECT OF DIVERSIFIED Risk Management Framework: Risk Management Framework Overseen by the Board of Directors, the CEO takes ultimate responsibility delivering on strategy, financial…
TCFD JOURNEY: ROADMAP TO ACHIEVING DIVERSIFIEDS GOALS The Importance of TCFD(a) Governance Aids the Company in assessing its own long-term climate-related risks and Strategy opportunities Provides line of sight to setting the…
Culture Wins... Focus on Environmental, Social, Governance Brad Gray Chief Operating Officer, Executive Director DIV.energy
PRESENTING ESG Executive Team Asset Operations Rusty Hutson, Jr. Brad Gray Eric Williams Jim Rode Ben Sullivan Bobby Cayton Maverick Bentley Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief Commercial…
KEEPING COMMITMENTS AND DELIVERING SOLUTIONS Our Culture Supports All Aspects of ESG Always Has and Always Will Driven by Long-Term Sustainability: Providing Positive Impacts & Solutions: We generate exceptional returns for our…
DIVERSIFIEDS IMPORTANT ROLE IN THE ENERGY TRANSITION IF NOT DIVERSIFIED...THEN WHO We are an important piece of the energy transition puzzle Emphasizing stewardship of mature, mid-life assets We are... filling gaps daily by placing new…
OUR PROGRESS, FOCUS AND COMMITMENTS ESG Progress Environment & Climate Progress Strategy Actions Asset Retirement Plans to Net Zero Social Governance DIV.energy 29
Climate & ESG Strategy Teresa Odom Vice President of ESG & Sustainability DIV.energy
KEEPING OUR COMMITMENTS: REMINDER OF 2021 ESG OBJECTIVES As Published in 2020 Year End Results Presentation 2021 ESG Objectives Strengthen controls and processes for top-tier identified enterprise risks Publish GHG emissions…
2021 PROGRESS: RISK CONTROLS Strengthen controls and processes for top-tier identified enterprise risks Risk Universe Principal Risks Recent & Ongoing Initiatives Climate Risk Corporate Strategy & Strategic Acquisition Risk o…
2021 PROGRESS: TCFD DISCLOSURES Publish GHG emissions reduction plans & expanded TCFD disclosures Improved Disclosures as TCFD Journey Continues None Basic Partial Leading DEC DEC Peer 1 Peer 2 2020 Peer 3 Peer 4 Peer 5 2021 Peer…
OUR FOCUS: STRATEGIC APPROACH TO GHG EMISSIONS Comprehensive Actions Designed to Meet Stakeholder Expectations M&A SCREENING Understanding the emissions status of target assets and, if purchased, identifying opportunities to…
OUR FOCUS: GHG EMISSIONS REDUCTIONS YTD Achievements 2021 Expanded resources with people and equipment LDAR and Data Analysts Emissions detection equipment Completed 2 voluntary inaugural Aerial LiDAR flights for emissions…
OUR COMMITMENTS: 2022 STEPS TOWARD NET ZERO Near-Term Plan Initially Investing 15 Million 2022 from 2022 for Emissions Reduction Utilizing new detection Finalize plan to net zero Planned Incremental Activity Est. Cost (millions)…
OUR COMMITMENTS: NAVIGATING THE PATH TO NET ZERO BEYOND 2022 Near-Term Plan Mid-Term Plan Long-Term Plan 2022 2023-2026 2027+ Utilizing new detection equipment, 30% reduction in methane emissions 50% reduction in methane emissions…
Environment & Climate Brad Gray Chief Operating Officer Paul Espenan Vice President of EH&S RESPECT ENVIRONMENTAL STEWARDSHIP AS WE MAKE BUSINESS DECISIONS COMPANY VALUE DIV.energy
COMMITTED TO PROGRESS...EDUCATING OUR TEAMS Our Commitment to Progress Begins At Home Our EH&S team developed this GHG emissions educational & promotional DGO Environmental Minute video for all Diversified employees DIV.energy 40
INVESTING IN EMISSIONS RESOURCES: INTERNAL TEAM AND PARTNERS Investing Emissions-Focused EH&S Talent Independent Partners Focused on Emissions Partnerships: Best Practice Sharing EH&S Leadership (2) Safety Air Emissions Field…
BUILDING A DISCIPLINED PROCESS: PROJECT FRESH Standardize process to inventory emissions producing equipment Objectives: Improve the accuracy of GHG emissions with a focus on accurate equipment inventories Reduce the use of…
EXPANDING FUGITIVE EMISSIONS DETECTION & AVOIDANCE Expand Leak Detection and Repair to reduce emissions ZERO Tolerance Policy By Land and By Air - for Natural Gas Leaks Making Leaks Rare AVO Inspection Supported by first daily…
INVESTING IN EMISSIONS RESOURCES: WELL SITE VISITS & NATURAL SENSES Conducting 100,000(a) Site Visits Each Month Leverage the Audio, Visual & Olfactory (AVO) abilities of our 1,000 Total Company experienced field employees,…
INVESTING IN EMISSIONS RESOURCES: TECHNOLOGY Deploying Multiple and Comprehensive Leak Detection Technologies TELEDYNE FLIR HEATH FLIR AERIAL Technology GT-44 RMLD - CS GF320 SURVEILLANCE Primary Use Proactive detection for well…
INVESTING IN EMISSIONS RESOURCES: AERIAL LIDAR Our Principles Drive Us to Do the Right Thing Engaged a leading aerial LiDAR provider to survey a large segment of recently acquired pipeline (pilot program) Review provided data with…
INNOVATIVE EMISSIONS REDUCTION: UPSTREAM ASSETS OPPORTUNITY IMPACT Field teams identified 220 wells that utilized a 2-valve system to assist Annual GHG Equivalent to the amount of CO2 sequestered by: with liquid unloading and are…
ADDRESSING EMISSIONS IN ACQUISITIONS Acquisitions and Asset Optimization Are Part of Diversifieds DNA SCREENING TOOLKIT New Assets Bring New Opportunities Internally developed methane intensity 2021 Acquisition Screening calculation…
EMISSIONS REPORTING AS A CONTINUOUS PROCESS EPA Calculation Considerations Reporting Frameworks Reported as per EPA guidelines IPCC Reporting(a): Blended use of measured emissions and outdated default factors Used in annual…
ASSET RETIREMENT: DELIVERING, EXPANDING COMMITMENTS IN 2022 Committed to Retiring Wells Safely & Efficiently West Virginia Plugging Team Delivering Results Our current commitment is unmatched We retire more Delivering 25% lower…
PARTNERING ON THE PATH TO NET ZERO Engaged Program Manager to Assist in the Development and Publication of 2040 Net Zero Plan Goals of Engagement Continue MACC(a) Assessment Assess GHG Baseline Emissions and Calculations Instrument…
SUSTAINABILITY FOCUSED SUSTAINABLE PROPOSITION Right Model, Right People, Right Time Ushering in the energy transition with the production of primarily cleaner-burning natural gas Uniquely Situated to Lead the Transition Financial…
Question & Answer 15 Minute Break to Follow DIV.energy
Safety Paul Espenan Vice President of EH&S OUR 1 DAILY PRIORITY SAFETYNO COMPROMISES DIV.energy
SAFETY: INVESTING EXTENSIVE RESOURCES TO DRIVE RESULTS Target zero preventable incidents: TRIR(a), driving safety, reportable spills Internally developed incident tracking tool Technology and Culture Driving Our Safety Focus o…
Social Mark Kirkendall Senior Vice President, Human Resources Laurie Knox Human Resources Business Partner VALUE THE DIGNITY AND WORTH OF ALL INDIVIDUALS COMPANY VALUE DIV.energy
SIGNIFICANT EMPLOYMENT OPPORTUNITIES AND BENEFITS Paying salaries nearly double regional average Excellent Compensation & Benefits Competitive gas & oil industry wages Average Income Comparison(a) States within Appalachian Operating…
PROGRESSING DIVERSITY THROUGH HIRING PRACTICES Ongoing Corporate Hiring Initiatives Implementation of Applicant Tracking System in 1Q21 Improves tracking and reporting of applicant diversity Supports corporate diversity efforts…
EMPLOYEE EXPERIENCE SURVEY 77 +6 pts Direct measure of employee engagement, ENGAGEMENT derived from questions like: I am proud to work for this company. 82% External Benchmark: 71 Exceeding 72 external benchmarks, +2 pts…
INVESTING IN FUTURE LEADERS: AT HOME Professional Development Program (PDP) What Is the PDP 2021 Team Focus 2-year program designed to develop personal professional Consistent and informative internal communications skills while…
INVESTING IN FUTURE LEADERS: IN OUR COMMUNITIES Diversified Scholarship Program Summer Internship Program 6 University Indiana University Seniors of Pennsylvania Marietta College Fairmont State University 5 DEC Departments…
INVESTING IN OUR COMMUNITIES: BY GIVING BACK Broaden community outreach and support Committed to Outreach Diversified At Work in Our Communities Our company values drive us to . Serve and support our teams and 1,300 130 million 50…
Governance Ben Sullivan General Counsel ACT WITH PERSONAL AND BUSINESS INTEGRITY COMPANY VALUE DIV.energy
COMMITTED TO BOARD DIVERSITY AND DEVELOPMENT Remuneration Sustainability Gender Diversity Tenure Diversity Audit & Risk Nomination & Safety Rusty Hutson, Jr. Appointment Co-Founder & Chief Executive Officer…
CORPORATE GOVERNANCE FRAMEWORK 2020 Adoption of the UK Governance Code Board of Directors Reflects requirements for a Premium-listed company Define business strategy, assess risk, monitor performance Transitioned from the Quoted…
OVERVIEW OF GOVERNANCE POLICIES The Board is currently evaluating all existing policies for continued applicability and completeness as part of its annual policies review process. Adopted independent administration of platform for…
COMMITTED TO CONSTRUCTIVE ENGAGEMENT WITH STAKEHOLDERS Involvement with State Regulators Participation in Industry Associations Proactive communication Remain abreast of changing rules and regulations Rapid responses Ensure knowledge…
Operations Business Model Brad Gray Chief Operating Officer SOME COMPANIES ARE BUILT TO DRILL, Upstream Midstream Marketing AND SOME TO OPERATE. DIVERSIFIED IS BUILT TO OPERATE VERY EFFICIENTLY. One DEC Digital Platform…
PRESENTING OPERATIONS Executive Team Asset Operations Rusty Hutson, Jr. Brad Gray Eric Williams Jim Rode Ben Sullivan Bobby Cayton Maverick Bentley Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief…
Upstream Operations Bobby Cayton Senior Vice President of Upstream Operations Upstream Midstream Marketing One DEC Digital Platform DIV.energy
UPSTREAM OPERATING PHILOSOPHY Ownership We teach ownership & we empower Accountability We set plans & we follow up Data + Human Interaction We conduct well reviews, develop plans & get to the well and do something…
REGIONAL FOCUS & ACCOUNTABILITY Production Operations by Region Line of business focus with geographic accountability Upstream Leadership Central Region Appalachia Basin Barnett Cotton Valley/ Ohio Pennsylvania/ Kentucky/West…
UPSTREAM SMARTER ASSET MANAGEMENT (SAM) Example Smarter Asset Management Activities Increasing Production & Improving Margins Well Pressure (Fluid Load) Improve safety, optimize production, increase 1 GOAL Plunger Lift, Pumpjack…
SMARTER ASSET MANAGEMENT INITIATIVES ACROSS THE PORTFOLIO SAM Drives Efficiency and Sustainability Continuing Our Pursuit of Small Victories and Generating BIG Wins Universal Appalachia Central Return idle or shut-in wells to…
SAM IN ACTION: IMPACTFUL UPSTREAM PROJECTS Return to Active Production Acquired Non-Producing Wells Downhole Pump Replacement Louisiana Pennsylvania Ohio Well Review: Identified wells shut-in Well Review: Identified Marcellus…
Midstream Operations Maverick Bentley Senior Vice President of Midstream Operations Upstream Midstream Marketing One DEC Digital Platform DIV.energy
MIDSTREAM OPERATING PHILOSOPHY Different Asset Type, Consistent Operating Philosophy Ownership We teach ownership & we empower Accountability We set plans & we follow up . . Data + Human Interaction We conduct facility…
REGIONAL FOCUS & ACCOUNTABILITY Midstream Operations by Region Line of business focus with geographic accountability and shared services for specialty functions Midstream Leadership Field Operations Shared Services Central…
APPALACHIA MIDSTREAM OPERATIONS Enhancing Value through Vertical Integration Midstream Assets in Appalachia Flow Assurance Midstream Assets Navigating system downtime and moving Diversified volumes on owned systems Pricing…
EXPERIENCE AND SCALE BRING OPPORTUNITIES Future Opportunities Objective: Enhance Margins Scale & growth provide many options for synergistic projects Currently Considering: Re-route gas to increase NGL production (Appalachia)…
SAM IN ACTION: COMPRESSION ELIMINATION Successful Consolidation of Appalachia Assets Drives Significant Midstream Scale and Opportunities for Improvement Asset Optimization Emissions Reductions Expense Efficiencies Proactive,…
Energy Marketing Ron Ridgway Senior Vice President of Energy Marketing Austin McDaniel Director of Energy Marketing Upstream Midstream Marketing One DEC Digital Platform DIV.energy
DIVERSIFIED ENERGY MARKETING A Top 25 Marketer(a) / Active in 20+ Markets Experienced Team Summary of Assets Managed Gas & NGL Marketing Producer services Gas Marketing Scheduling Midstream 1.2 BCF of gas marketed per day…
MARKETING 99% OF PRODUCED VOLUMES TO MAXIMIZE PRICING Advantages in Appalachia Managing volumes through owned midstream assets allows: Gas reroutes to highest value markets Avoid interstate capacity constraints without firm…
NGL SUMMARY Portfolio of NGL Assets Provide Strong NGL Uplift 2021 NGL Marketed Composition(b) 19 million gallons per month of NGL production Pentane (C5+): 16% Majority of NGL production is from Langley Plant in Pike County, N-Butane…
DIVERSIFIED ENERGY MARKETING THEN NOW BENEFITS FUTURE Enhanced Increase TIK(a) Multiple One Org Production Marketing Pricing Liquid Contracts Structure Entities Affiliate Reduced Firm Increase Gas Sales Transport to…
Enabling the Digital Gas Field Supporting a High Growth Model Brad Gray Chief Operating Officer Upstream Midstream Marketing One DEC Digital Platform DIV.energy
BUILDING DIGITAL OPERATIONS: THE ROLE OF TECHNOLOGY Vision: Drive Value from the Wellhead to the Board Room Results Scalable digital platform Strategy supporting rapid acquisition Goals model Safety First increase defences…
Finance Eric Williams Chief Financial Officer Randy Barron Senior Vice President, Strategy & Finance John Crain Vice President, Treasurer DIV.energy
PRESENTING FINANCE Executive Team Asset Operations Rusty Hutson, Jr. Brad Gray Eric Williams Jim Rode Ben Sullivan Bobby Cayton Maverick Bentley Chief Executive Officer Chief Operating Officer Chief Financial Officer Chief…
PRUDENT ALLOCATION OF CASH FLOW 3.16/Boe Fund ESG Commitments 2.76/Boe (0.53/Mcfe) Invest in broad spectrum of sustainability initiatives (0.46/Mcfe) 0.40 Base LOE (b) ESG commitment(a)= 15% of Base LOE Pay Meaningful…
PROVEN STEWARDSHIP MODEL DELIVERING RETURNS Accretive acquisitions of long-life assets driving attractive returns to our stakeholders Safe Low Accretive Access to Systematic Production Operating Low-Cost Declines Asset Cash…
TOTAL RETURNS SINCE IPO REFLECT THE DIVERSIFIED DIFFERENCE Uniquely Built to Generate SustainableAdd Cashso what Flows statement & Delivers Nearly 200% In Cumulative Returns Since IPO 350 Share Price Performance Diversified Energy…
PROVEN STEWARDSHIP MODEL DELIVERING RETURNS Add so what Creating a Distinct Competitive statement Advantage With Low Corporate Declines Stable production reduces need to replace cash flows, resulting in Annual Production…
LOW DECLINES CREATE DISTINCT COMPETITIVE ADVANTAGES Superior Reliable Capital Intensity Dividends Eases pressure to replace Underpins consistent production and maintain funding of meaningful Low Production cash generation Greater…
DELIVERING HIGH CASH MARGINS THROUGHOUT THE PRICE CYCLE 18.71 Focus on Producing Assets 17.35 Realized Cultivate core competency in efficient operations Price 15.14 with SAM creating incremental upside 54% 56% Hedge to…
HEDGE PROGRAM SUPPORTS STABLE FINANCIAL PROFILE Rolling Coverage Targets Reduce Exposure to Price Volatility, Complement Stable Production Focus on price protection provides significant visibility to both near and long-term cash flow…
DISCIPLINE AFFORDS ACCESS TO LOW-COST DEBT Preferred Ceiling Leverage US Peer Avg Differentiated Access to Capital Markets 4.0x 4.3x 3.5x Leverage(a) History Consistently supportive capital markets for the Company's highly…
EXPANDING ASSET RETIREMENT COMMITMENTS Establishing the Program Growing the Retirement Program Historical Progress of the Retirement Program Diversified proactively engaged with State regulators in 2018-2019 to create minimum…
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