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| Borrowings | Note 10 - Borrowings The Company’s borrowings consist of the following amounts (in thousands) as of the date presented:
(a)Represents a variable interest rate based on utilization. (b)Includes $20 million in notes payable issued by a third party financial institution in November 2024, collateralized by two natural gas processing plants and various natural gas compressors and related support equipment in the Central Region, as of June 30, 2026. Credit FacilityThe Company maintains a Credit Facility with a lending syndicate, the borrowing base for which is redetermined semi-annually or in certain other situations as described therein. The Company’s wholly owned subsidiary, DP RBL Co LLC, serves as the borrower under the Credit Facility. The borrowing base is primarily determined by the value of the natural gas and oil properties that serve as collateral for the lending arrangement, and it may fluctuate due to changes in collateral, which can result from acquisitions or the establishment of ABS, term loans, or other lending structures. As of June 30, 2026, the Company’s Credit Facility had a borrowing base of $900 million and a maturity of March 2029. The Credit Facility has an interest rate of SOFR plus an additional spread ranging from 2.75% to 3.75% based on utilization. Interest payments on the Credit Facility are paid on a quarterly basis. Available borrowings under the Credit Facility were $669 million as of June 30, 2026, which excludes $35 million in letters of credit issued to certain vendors. ABS IV NotesIn February 2022, the Company formed Diversified ABS IV LLC (“ABS IV”), a limited-purpose, bankruptcy-remote, wholly-owned subsidiary, to issue asset-backed securities with a total principal amount of $160 million at par (the “ABS IV Notes”). The ABS IV Notes were secured by a portion of the upstream producing assets acquired through the Blackbeard acquisition. The ABS IV Notes had an annual interest rate of 4.95% and a legal final maturity date of February 2037. Both interest and principal payments on the ABS IV Notes were made on a monthly basis. In June 2026, the ABS IV Notes were repaid and retired from the Company’s outstanding debt in connection with the Company’s divestiture of its Barnett assets. ABS VI NotesIn October 2022, the Company formed Diversified ABS VI LLC (“ABS VI”), a limited-purpose, bankruptcy-remote, wholly-owned subsidiary, to issue, jointly with Oaktree Capital Management, L.P. (“Oaktree”), asset-backed securities with a total principal amount of $460 million. The Company’s share amounted to $236 million before fees, reflecting its 51.25% ownership interest in the collateral assets (the “ABS VI Notes”). The ABS VI Notes were issued at a 2.63% discount and were primarily secured by the upstream assets jointly acquired with Oaktree in the Tapstone acquisition. The Company recorded its proportionate share of the ABS VI Notes in its Condensed Consolidated Balance Sheets. In June 2024, as part of the Oaktree acquisition, the Company assumed Oaktree’s proportionate debt of $133 million associated with the ABS VI Notes. The ABS VI Notes carried an annual interest rate of 7.50% and had a legal final maturity date of November 2039. Both interest and principal payments on the ABS VI Notes were made on a monthly basis. In May 2026, the ABS VI Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance of the ABS XII Notes (as defined below). ABS VIII NotesIn May 2024, the Company formed Diversified ABS VIII LLC (“ABS VIII”), a limited-purpose, bankruptcy-remote, wholly-owned subsidiary, to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS VIII Notes,” “Class A-2 ABS VIII Notes,” and collectively the “ABS VIII Notes”). The Class A-1 Notes were issued with a total principal amount of $400 million, while the Class A-2 ABS VIII Notes were issued with a total principal amount of $210 million. The proceeds from these issuances were used to repay the outstanding principal of the ABS III & ABS V notes, effectively retiring those notes from the Company’s outstanding debt. Consequently, ABS III and ABS V were dissolved. The ABS VIII Notes are secured by the collateral that previously secured the ABS III and ABS V notes, which includes certain upstream producing and midstream assets in the Appalachian Region owned by the Company, and the remaining upstream assets in the Appalachian Region that were not securitized by previous ABS transactions. The Class A-1 ABS VIII Notes carry an annual interest rate of 7.076%, while the Class A-2 ABS VIII Notes carry an annual interest rate of 7.670%. These notes have an anticipated repayment date of May 2029 and a legal final maturity date of May 2044. Both interest and principal payments on the ABS VIII Notes are made on a monthly basis. ABS VIII is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the debt service coverage ratio (the “DSCR”) is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.50 to 1.00, then 50%, or (iii) if the DSCR is at least 1.50 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%, otherwise 25%; or (c) if the loan-to-value ratio (“LTV”) exceeds 75%, then 100%, otherwise 25%. ABS IX NotesIn June 2024, the Company formed DP Mustang Holdco LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS IX,” formerly “ABS Facility Warehouse”), to secure a bridge loan facility (the “ABS Facility Warehouse Notes”). The initial draw on the ABS Facility Warehouse Notes amounted to $71 million, which included $66 million in net proceeds, $3 million in restricted cash interest reserve, and $2 million in debt issuance costs. The ABS Facility Warehouse Notes were secured by certain producing assets that previously collateralized the Credit Facility. It carried an interest rate of SOFR plus an additional 3.75% and had a legal final maturity date of May 2029. Both interest and principal payments on the ABS Facility Warehouse Notes were made on a monthly basis. In September 2024, the Company issued Class A and Class B asset-backed securities (the “Class A ABS IX Notes,” “Class B ABS IX Notes,” and collectively the “ABS IX Notes”) with a total principal amount of $77 million. The Class A ABS IX Notes were issued with a total principal amount of $71 million, while the Class B ABS IX Notes were issued with a total principal amount of $6 million. The proceeds from these issuances were used to repay the outstanding principal of the ABS Facility Warehouse Notes, effectively retiring it from the Company’s outstanding debt and resulting in a loss on the early retirement of debt amounting to $2 million. The Class A ABS IX Notes carry an annual interest rate of 6.555% and have an anticipated repayment date of September 2029 and a legal final maturity date of September 2044. The Class B ABS IX Notes carry an annual interest rate of 11.235%. Both interest and principal payments on the ABS IX Notes are made on a monthly basis. ABS IX is required to allocate 25% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the DSCR at the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00, then 50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 25%; (b) if the production tracking rate is below 80%, then 100%, otherwise 25%; (c) if the LTV exceeds 75%, then 100%, otherwise 25%; or (d) if past the anticipated repayment date, then 100%, otherwise 25%. In addition, while the Class A Notes remain outstanding, the Class B Notes receive a minimum allocation of 14% of the excess cash flow remaining after the payments ranking senior to them. ABS X NotesIn February 2025, the Company formed Diversified ABS Phase X LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS X”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS X Notes,” “Class A-2 ABS X Notes,” “Class B ABS X Notes,” and collectively the “ABS X Notes”) with a total principal amount of $530 million. The Class A-1 ABS X Notes were issued with a total principal amount of $200 million. The Class A-2 ABS X Notes were issued with a total principal amount of $240 million. The Class B ABS X Notes were issued with a total principal amount of $90 million. The proceeds from these issuances were used to repay the outstanding principal of the ABS I Notes, ABS II Notes, and Term Loan I, effectively retiring those notes from the Company’s outstanding debt. The ABS X Notes are secured by certain upstream producing assets in the Appalachian Region owned by the Company, including those that previously collateralized the ABS I Notes, ABS II Notes, and Term Loan I. Excess proceeds from the issuance of the Notes were used to fund the Summit acquisition and for general corporate purposes. Refer to Note 2 for additional information regarding acquisitions. The Class A-1 ABS X Notes carry an annual interest rate of 5.945%. The Class A-2 ABS X Notes carry an annual interest rate of 6.751%. The Class B ABS X Notes carry an annual interest rate of 10.398%. These notes have an anticipated repayment date of February 2030 and a legal final maturity date of February 2045. Both interest and principal payments on the ABS X Notes are made on a monthly basis. ABS X is required to allocate 32.5% to 100% of any excess cash towards additional principal payments. Specifically, (a) (i) if the DSCR as of the applicable payment date is below 1.45 to 1.00, then 100%, (ii) if the DSCR is between 1.45 to 1.00 and 1.55 to 1.00, then 50%, or (iii) if the DSCR is at least 1.55 to 1.00, then 32.5%; (b) if the production tracking rate is below 80%, then 100%, otherwise 32.5%; (c) if the LTV exceeds 80%, then 100%, and (ii) if the LTV exceeds 75% but is not more than 80%, then 50%, otherwise 32.5%; or (d) if the aggregate LTV exceeds 90%, then 100%. In addition, while the Class A Notes remain outstanding, the Class B Notes receive a minimum allocation of 15% of the excess cash flow remaining after the payments ranking senior to them. ABS Maverick NotesIn February 2025, the Company formed Maverick ABS Holdings LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS Maverick”), to hold the Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS Maverick Notes,” “Class A-2 ABS Maverick Notes,” “Class B ABS Maverick Notes,” and collectively the “ABS Maverick Notes”) assumed as part of the Maverick acquisition. These Notes had a total principal amount of $640 million upon issuance. The Class A-1 ABS Maverick Notes were issued with a total principal amount of $285 million. The Class A-2 ABS Maverick Notes were issued with a total principal amount of $260 million. The Class B ABS Maverick Notes were issued with a total principal amount of $95 million. Upon acquisition, the ABS Maverick Notes carried a 1.6% market premium and were secured by certain upstream producing assets in the Western Anadarko Basin acquired in the Maverick acquisition. Refer to Note 2 for additional information regarding acquisitions. The Class A-1 ABS Maverick Notes had an annual interest rate of 8.121%. The Class A-2 ABS Maverick Notes had an annual interest rate of 8.946%. The Class B ABS Maverick Notes had an annual interest rate of 12.436%. These notes had a legal final maturity date of December 2038. Both interest and principal payments on the ABS Maverick Notes were made on a monthly basis. In May 2026, the ABS Maverick Notes were repaid and retired from the Company’s outstanding debt in connection with the issuance of the ABS XII Notes (as defined below). ABS XI NotesIn November 2025, the Company formed DP Keeneland Mile LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS XI”), to issue Class A-1, Class A-2, and Class B asset-backed securities (the “Class A-1 ABS XI Notes,” “Class A-2 ABS XI Notes,” “Class B ABS XI Notes,” and collectively the “ABS XI Notes”) with a total principal amount of $400 million. The Class A-1 ABS XI Notes were issued with a total principal amount of $247 million. The Class A-2 ABS XI Notes were issued with a total principal amount of $91 million. The Class B ABS XI Notes were issued with a total principal amount of $62 million. The proceeds from this issuance were used to fund, in part, the Canvas acquisition and are secured by certain upstream producing assets acquired. The Class A-1 ABS XI Notes carry an annual interest rate of 5.757%. The Class A-2 ABS XI Notes carry an annual interest rate of 6.547%. The Class B ABS XI Notes carry an annual interest rate of 10.129%. These notes have an anticipated repayment date of November 2030 and a legal final maturity date of November 2045. Both interest and principal payments on the ABS XI Notes are made on a monthly basis. ABS XI is required to allocate 33% to 100% of any excess cash flow towards additional principal payments. Specifically, (a) (i) if the DSCR is below 1.15 to 1.00, then 100%, (ii) if the DSCR is between 1.15 to 1.00 and 1.45 to 1.00, then 50%, or (iii) if the DSCR is at least 1.45 to 1.00, then 33%; (b) if the production tracking rate is below 80%, then 100%, otherwise 33%; or (c) if the LTV exceeds 75%, then 100%, otherwise 33%. In addition, while the Class A Notes remain outstanding, the Class B Notes receive a minimum allocation of 17.5% of the excess cash flow remaining after the payments ranking senior to them. ABS XII NotesIn May 2026, the Company formed DP Red River LLC, a limited-purpose, bankruptcy-remote, wholly-owned subsidiary (“ABS XII”), to issue Class A-1 and Class A-2 asset-backed securities (the “Class A-1 ABS XII Notes,” “Class A-2 ABS XII Notes,” and collectively the “ABS XII Notes”) with a total principal amount of $850 million. The Class A-1 ABS XII Notes were issued with a total principal amount of $590 million. The Class A-2 ABS XII Notes were issued with a total principal amount of $260 million. The proceeds from this issuance were used to repay the outstanding principal of the ABS Maverick Notes and ABS VI Notes, pay any related premiums, fees, and expenses and for general corporate purposes. The ABS XII Notes are secured by specific upstream producing assets in the Western Anadarko Basin that previously collateralized the ABS Maverick Notes and ABS VI Notes. The Class A-1 ABS XII Notes carry an annual interest rate of 6.016%. The Class A-2 ABS XII Notes carry an annual interest rate of 6.910%. These notes have an anticipated repayment date of May 2031 and a legal final maturity date of May 2046. Both interest and principal payments on the ABS XII Notes are made on a monthly basis. ABS XII is required to allocate 45% to 100% of any excess cash flow towards additional principal payments. Absent a performance trigger, the required allocation is 45% for the first 24 months following closing, 55% for months 25 through 36, and 60% thereafter, in each case increased by 10 percentage points if the DSCR is below 1.75 to 1.00. The allocation increases to 100% if (a) the DSCR is below 1.45 to 1.00, (b) the production tracking rate is below 85%, (c) the LTV is at or above 85% during the first 36 months following closing, 80% during months 37 through 48, or 75% thereafter, or (d) a rapid amortization event has occurred and is continuing. Nordic BondsIn April 2025, the Company issued the Nordic Bonds, consisting of $300 million of new senior secured notes in the Nordic bond market at a 2% discount, resulting in net proceeds of $294 million (the “Nordic Bonds”). The proceeds were used to repay existing indebtedness and for general corporate purposes. The Nordic Bonds mature in April 2029 and bear interest at a fixed rate of 9.75% per annum, payable semi-annually in arrears. The Bonds are secured by (i) all of the Company’s U.S. bank accounts, (ii) the equity interests in Diversified Gas and Oil Company (“DGOC”) as well as DGOC’s equity interests in its direct operating subsidiaries and (iii) interests in certain intercompany loans. The Nordic Bonds were listed for trading on the Oslo Stock Exchange in October 2025. In February 2026, the Company completed a $200 million tap-on offering, increasing the aggregate principal amount of the outstanding Nordic Bonds to $500 million. The additional Bonds were issued at a 3.5% discount, resulting in net proceeds of $193 million before transaction costs and other fees. The proceeds were used for general corporate purposes. The additional Nordic Bonds were listed for trading on the Oslo Stock Exchange in July 2026. Early Retirement of DebtIn February 2025, the Company used proceeds from the ABS X Notes to repay the outstanding principal of the ABS I & II notes and Term Loan I (each as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025), thereby retiring the ABS I & II notes and Term Loan I from the Company’s outstanding debt and resulting in a loss on the early retirement of debt of $27 million. Concurrently, Diversified ABS Holdings LLC, Diversified ABS Phase II Holdings LLC, and DP Bluegrass Holdings LLC were dissolved. The ABS X Notes are secured by the collateral previously securing the ABS I & II notes, along with a portion of the collateral previously securing Term Loan I. In March 2025, the Company used proceeds from the upsized borrowing base on the amended and restated credit agreement governing the Credit Facility to repay the outstanding principal on Term Loan II (as previously defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025), thereby retiring Term Loan II from the Company’s outstanding debt and resulting in a loss on the early retirement of debt of $0.2 million. In May 2026, the Company used proceeds from the ABS XII Notes to repay the outstanding principal of the ABS Maverick Notes and ABS VI Notes, thereby retiring the ABS Maverick Notes and ABS VI Notes from the Company’s outstanding debt resulting in a loss on the early retirement of debt of $21 million. Concurrently, Maverick ABS Holdings LLC and Diversified ABS VI LLC were dissolved. The ABS XII Notes are secured by the collateral previously securing the ABS Maverick Notes and ABS VI Notes. In June 2026, the Company used proceeds from the Barnett assets divestiture to repay the outstanding principal of the ABS IV Notes, thereby retiring the ABS IV Notes from the Company’s outstanding debt and resulting in a loss on the early retirement of debt of $2 million. Concurrently, Diversified ABS IV LLC was dissolved. Debt CovenantsCredit Facility The Credit Facility contains certain customary representations and warranties and affirmative and negative covenants, including covenants relating to: maintenance of books and records; financial reporting and notification; compliance with laws; maintenance of properties and insurance; and limitations on incurrence of indebtedness, liens, fundamental changes, international operations, asset sales, making certain debt payments and amendments, restrictive agreements, investments, restricted payments and hedging. The restricted payment provision governs the Company’s ability to make discretionary payments such as dividends, share repurchases, or other discretionary payments. DP RBL Co LLC must comply with the following restricted payments test in order to make discretionary payments (i) leverage is less than 1.5x and borrowing base availability is >20%, or (ii) leverage is between 1.5x and 2.0x, free cash flow must be positive, and borrowing base availability must be >20%; and (iii) when leverage exceeds 2.0x, restricted payments are prohibited. Additional covenants require DP RBL Co LLC to maintain a ratio of total debt to EBITDAX of not more than 3.25 to 1.00 and a ratio of current assets (with certain adjustments) to current liabilities of not less than 1.00 to 1.00 as of the last day of each fiscal quarter. As of June 30, 2026, the Company was in compliance with all covenants for its Credit Facility. ABS VIII, IX, X, XI, and XII Notes (Collectively, the “ABS Notes”) and the Nordic Bonds The ABS Notes and Nordic Bonds are governed by a series of covenants and restrictions typical for such transactions, including (i) the requirement for the issuer to maintain specified reserve accounts to ensure the payment of interest on the ABS Notes and Nordic Bonds, (ii) provisions for optional and mandatory prepayments, specified make-whole payments under certain conditions, (iii) covenants related to recordkeeping, access to information and similar matters, and (iv) compliance with all applicable laws and regulations. The ABS Notes have an anticipated repayment date, which occur between May 2029 and May 2031, that precedes their legal final maturity date. The Company currently expects to repay or refinance each such series on or prior to its anticipated repayment date. If a series of ABS Notes is not repaid or refinanced by its anticipated repayment date, an accelerated amortization event occurs under the applicable indenture. In that event, substantially all cash flow generated by the assets securing that series, after payment of senior fees, hedge amounts, interest and scheduled principal, is applied to repay principal of that series and is not available for distribution to the Company, and an additional amount accrues on the outstanding notes of that series at a rate of 2% per annum above the applicable stated interest rate. The failure to repay a series of ABS Notes on its anticipated repayment date is not an event of default under the applicable indenture, and does not accelerate, or constitute a default under, any other series of ABS Notes, the Credit Facility or the Nordic Bonds. The ABS Notes and Nordic Bonds are also subject to customary accelerated amortization events as outlined in the agreements governing such indebtedness. These events may include failure to maintain specified debt service coverage or loan to value ratios, failure to meet certain production metrics, certain change of control and management services agreement termination events, and non- compliance with hedging requirements, as applicable. The ABS Notes and Nordic Bonds are subject to customary events of default, which may include, as applicable, non-payment of required interest, principal, or other amounts due, failure to comply with covenants within specified time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and failure of the indebtedness to be redeemed upon a change in control event. Additionally, the Nordic Bonds contain the following financial covenants (i) the leverage ratio shall not exceed 3.5x, (ii) the asset coverage ratio shall not be less than 1.20 to 1.00, (iii) book equity shall not be less than $500 million, and (iv) liquidity shall not be less than 25% of the outstanding bonds. As of June 30, 2026, the Company was in compliance with all covenants related to the ABS Notes and Nordic Bonds. Future MaturitiesThe table below represents the Company’s future maturities of its total borrowings as of June 30, 2026, excluding deferred financing costs, premiums, and discounts, and does not reflect the effect of the anticipated repayment dates of the ABS Notes, which occur between May 2029 and May 2031:
The table details the Company’s interest expense for each of the periods presented:
The table below represents the fair value of the Company’s debt structures for the date presented:
(a)Carrying value approximates fair value. (b)Fair values are measured using a market approach, based upon market rates, which are Level 2 inputs.
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