Home Estate Planning Diversified Energy shares continue slide as well clean-up bill grows

Diversified Energy shares continue slide as well clean-up bill grows

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Stronger production outflows, an asset yard sale and environmental promises have done little to pull up London-listed oil and gas well owner Diversified Energy continually flagging share price.

The company, whose stock is down over 50 per cent in the last six months, today reported production up to 136,800 barrels of oil equivalents per day (Mboepd) up from 135,000 this time last year.

Estimated adjusted EBITDA was also up to what the company described as “record levels” of $540 to $545m while a $200m asset sale, announced earlier this month, stands in as an attempt to avoid a dividend cut in the absence of revenue growth.

The statement made much focus on Environmental and Social Governance (ESG)-orientated achievements, such as winning “ESG Report of the Year from ESG Awards 2023” and “increasing MSCI sustainability rating to AA leadership status.”

The well owner has come under heavy fire in recent months for allowing methane excessive methane leakage across its 70,000-strong inventory of U.S. wells, prompting Congress to officially request a turnaround plan in December, one day after the company revealed an additional listing on the New York stock exchange.

This, despite fears from U.S government that the company does not have the funds to complete the necessary repairs leaving billions of dollars of cleanup costs to state governments in Pennsylvania, West Virginia, Ohio and Kentucky. 

This concern, it appears, has not gone away. London activist short seller Snowcap Research last week published a memo warning of a dividend cut to fund its well clean-ups.

The company’s self-reported “discretionary cash flows” are calculated using what it believes to be “a flawed and misleading methodology”, the note reads.

“By our adjusted calculation, discretionary cash flows in the last 12 months were just $3m (versus dividends of $162m),” Snowcap added.

Diversified responded saying it “continues to focus on delivering long-term shareholder value, prioritisation of outstanding debt reduction, and evaluating strategic growth and accretive value-additive opportunities”.

In today’s update, chief executive Rusty Hutson Jr said he is ” very proud” of the company’s efforts to lower methane intensity.

In today’s announcement, Diversified said in 2023 it conducted over 246,000 leak detection surveys and retired 384 wells.

The data come ahead of the company’s full-year results on March 19th.

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