Diversified Energy
| Company type | Public limited company |
|---|---|
| Industry | Oil and gas production |
| Founded | 2001 |
| Founder | Robert ('Rusty') Hutson |
| Headquarters | Birmingham , United Kingdom |
Area served | Appalachian Basin and Central Region, United States |
Key people | Robert ('Rusty') Hutson (founder) |
| Products | Oil and gas |
| Website | www |
Diversified Energy Company PLC, previously known as Diversified Gas & Oil PLC, is engaged in the production of oil and gas within the Appalachian Basin and the Central Region of the United States. The company is publicly traded on both the London Stock Exchange and the New York Stock Exchange, and it forms part of the FTSE 250 Index.
History
Established in 2001 by Robert ('Rusty') Hutson with the acquisition of a gas well in West Virginia, the firm grew by purchasing mature oil and gas wells that larger producers had abandoned. It initially listed on the Alternative Investment Market in February 2017 before upgrading to the premium segment in May 2020.
On 6 May 2021, the company underwent a rebranding, changing its name from Diversified Gas & Oil PLC to Diversified Energy Company PLC, along with updating its TIDM ticker symbol from DGOC to DEC.
Notable acquisitions include:
- December 2021: Tapstone Energy Holdings, an Oklahoma-based firm, acquired for $174 million
- April 2022: Upstream assets and facilities located in East Texas purchased for $50 million
- September 2022: Central region assets acquired from ConocoPhillips Company for $240 million
- March 2023: Texas upstream assets obtained from Tanos Energy Holdings II LLC for $250 million
Operations
Diversified Energy's core strategy involves acquiring end-of-life wells from major operators, which are attractively priced due to state regulations mandating costly plugging of non-productive wells. While plugging expenses are high, the company asserts it can plug wells at costs below $25,000 each—substantially less than competitors’ estimates. In 2022 alone, Diversified Energy plugged 200 wells and added approximately 100 more during the first half of 2023. The firm anticipates maintaining operations on these wells for up to five decades, thereby diminishing the present value of future plugging obligations. This methodology enables Diversified Energy to carry wells on its books at valuations exceeding their acquisition cost. Since 2014, gains recognized through this accounting approach have surpassed its total reported earnings.
By October 2021, Diversified Energy had become the largest well owner in the United States, holding over 69,000 oil and gas wells.
The company’s business model centers on acquiring aging wells characterized by minimal production decline rates and hedging anticipated output several years ahead to ensure stable cash flows. These hedged production volumes are securitized into asset-backed securities (ABS) structured with amortizing schedules that correspond to declining production profiles. In 2022, Diversified Energy broadened its operations by purchasing three well-plugging firms, which were integrated under its subsidiary Next LVL Energy.
Since 2019–2020, it has entered into long-term agreements with Kentucky, West Virginia, Ohio, and Pennsylvania to plug wells. These contracts extend over periods ranging from 10 to 15 years and obligate Diversified Energy to plug a predetermined number of wells annually.
Environmental Impact
In 2018, a subsidiary of Diversified Energy was found by the Pennsylvania Department of Environmental Protection to be non-compliant concerning over 1,000 abandoned wells.
Ohio regulators in 2019 concluded that Diversified Energy had falsely reported a well as producing natural gas to circumvent plugging requirements; the company described this as an inadvertent mistake.
Although Diversified Energy announced a 28% reduction in greenhouse gas emissions between 2019 and 2020 to investors in April 2021, Environmental Protection Agency (EPA) records indicated a 19% increase during that timeframe.
A Bloomberg investigation published in October 2021 uncovered that approximately 59% of sampled wells owned by Diversified Energy were leaking substantial amounts of methane. Many of these wells produced little or no gas, with some appearing abandoned. State regulations require costly plugging of such nonproducing wells. Following this report’s release, Diversified’s share price fell by 21% within a single trading day.
External links
- Short description with empty Wikidata description
- Businesses founded in 2001
- Enterprises traded on the London Stock Exchange
- American oil corporations
- United States natural gas firms
- Energy sector companies founded in 2001
- Non-renewable resource enterprises established in 2001
- Organizations headquartered in Birmingham, Alabama
- Members of the FTSE 250 Index
- Natural gas companies of the United States