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(Alliance News) - Diversified Energy Co PLC on Monday reported a steep loss in the first half, thanks to runaway commodity derivative losses, but saw production and revenue improve.
In the six months to June 30, the Alabama, US-based oil and gas company focused in the US recorded a net loss of USD935.3 million, widened significantly from the USD94.0 million loss reported the year prior.
Diversified noted it made a USD468.7 million net loss on derivative settlements, a stark rise from the USD21.9 million loss from last year - stemming from a USD385.2 million loss on natural gas derivatives.
"While this loss certainly reflects the increase in commodity markets in relation to our hedge floor, the magnitude of the loss is amplified due to the increase in the size of our long-dated hedge portfolio, which has increased meaningfully with the addition of asset-backed securitisation III, IV and V," the firm explained.
Total expenses also rose to USD439.1 million from USD234.3 million. Diversified's total operating and general & administrative expenses doubled to USD320.6 million from USD161.9 million.
Total revenue surged to USD933.5 million from USD323.3 million.
Net production in the first half rose to 24.6 million barrels of oil from 19.1 million the year before. Average daily production was up to 136,022 barrels of oil per day from 105,707.
The FTSE 250-listed firm noted the average realised sales price improved to USD37.12 from USD16.05.
"During first half of 2022, we continued to expand our successes by delivering on a number of key strategic initiatives in line with our long-term growth strategy," Chief Executive Rusty Hutson said.
"Our recent accretive acquisition of low decline, high margin upstream assets complements our existing Central Region operations, allowing us to build scale, improve margins and harvest synergies. In Appalachia, our acquisition and vertical integration of multiple plugging companies expands our asset retirement programme to 15 plugging rigs and enables us to achieve our target of plugging 200 wells per year, while also reducing our effective retirement costs as we earn revenue by retiring wells for others."
Hutson also said the firm remains committed to "tangible" shareholder returns, and noted Diversified has upped its second quarter dividend to USD0.0425 from USD0.0400.
"Our balance sheet remains healthy as we continue into the second half of 2022 with ample Liquidity, cash generation and financing capacity to fund further complementary growth opportunities," he added.
Shares in Diversified Energy were 1.4% higher in London on Monday morning at 126.60 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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