Diversified Energy reports third-quarter results as Birch deal stays on track

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Diversified Energy Q3 & Birch deal

Highlights

Diversified Energy reported Q3 2026 net loss of $202 million on $470 million revenue and $256 million adjusted EBITDA, including a $348 million loss on non-cash unsettled derivatives.
The Birch Resources acquisition remains on track to close in Q4, with pro forma adjusted EBITDA expected to rise 55% and adjusted free cash flow to more than double.
Year-to-date, Diversified generated $149 million from acreage sales and returned $157 million to shareholders via $94 million in buybacks and $63 million dividends, implying a 17% yield.

Quarter performance and transaction progress

As reported by London Stock Exchange, Diversified Energy says it is on schedule for an expected fourth-quarter closing of its Birch Resources acquisition, a deal the company says would create a top-15 U.S. publicly listed independent oil and gas company based on production. The company adds that the portion of Birch production tied to ABS financing has been hedged ahead of closing.

For the third quarter ended Sept. 30, 2026, Diversified reports average production of 1,189 MMcfepd, or 198 Mboepd, total commodity revenue of $470 million, adjusted EBITDA of $256 million, operating cash flow of $136 million and adjusted free cash flow of $153 million. Net loss stands at $202 million, including a $348 million loss on non-cash unsettled derivatives, while capital expenditures total $39 million.

Chief executive Rusty Hutson Jr. says operating execution by field teams supports predictable cash flow generation and strategic growth. He says the Birch transaction is expected, on a pro forma basis, to lift adjusted EBITDA by an estimated 55% and increase adjusted free cash flow by more than 100%.

Shareholder returns and U.S. asset development

Beyond the quarterly figures, Diversified says year-to-date acreage sales have generated about $149 million as part of its portfolio optimization efforts. The company also says its business model has supported roughly $157 million in shareholder returns so far this year, made up of $94 million in share repurchases and about $63 million through its fixed dividend, equivalent to an approximate 17% shareholder return yield.

In operations, Diversified says it has completed drilling the first four wells in its 20-gross-well Oklahoma development program, with completion activities now underway. The company says the program remains on schedule and that further updates are expected in 2027.

Diversified also says the third quarter marks the first period of cash flows received from its 40% ownership in the special purpose vehicle holding producing assets acquired in the Camino transaction with Carlyle. Total cash flows amount to about $8.6 million, including approximately $6.6 million from residual operating cash flow and about $2.0 million in management fees.

Our earlier article reviewed how the S&P 500’s advance toward the 8,000 mark was being tested by the upcoming third-quarter earnings season amid higher oil prices, elevated Treasury yields, and political uncertainty. It also highlighted concerns about market concentration, noting that headline earnings strength was being driven heavily by a narrow group of mega-cap leaders while market breadth weakened.

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