Diversified Energy Company, a Delaware corporation (“Diversified,” “DEC,” “we,” “us,” “our,” or collectively with its wholly owned

subsidiaries, the “Company”) is an independent energy company engaged in the development, production, transportation and

marketing of natural gas, oil and NGLs. The Company’s assets are located in the United States within the following geographical

•Appalachian Region, which spans Ohio, Indiana, Pennsylvania, Virginia, West Virginia, Kentucky, Tennessee and Alabama;

•Central Region, which includes Texas, Oklahoma, New Mexico, and Louisiana;

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted

accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to

such rules and regulations, certain disclosures have been condensed or omitted. These unaudited condensed consolidated financial

statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended

December 31, 2025, as included in the Company’s Annual Report on Form 10-K. The accompanying unaudited condensed

consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair

statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our direct and

indirect wholly owned subsidiaries and entities in which we have a controlling financial interest. Intercompany accounts and balances

Certain reclassifications have been made to prior period financial statements and related disclosures to conform to current period

presentation. These reclassifications have no impact on previously reported total assets, total liabilities, net income or total operating

In accordance with ASC 280, Segment Reporting, the Company determines its operating segments based on the components of the

business regularly reviewed by the chief executive officer, who serves as the chief operating decision maker (“CODM”), for purposes

of resource allocation and performance assessment. The CODM evaluates the Company’s operations in a consolidated manner.

Accordingly, the Company has one reportable segment.

The CODM uses consolidated income (loss) before income taxes to allocate resources and assess operating performance, and is also

regularly provided information on lease operating expense, transportation expense, production taxes, and general and administrative

expense, which represent significant segment expenses. Other segment items primarily consist of depreciation, depletion and

amortization, interest expense, and income tax expense (benefit). These amounts are derived from, and can be found within, the

Company’s Condensed Consolidated Statements of Comprehensive Income (Loss).

Segment profit or loss reconciles directly to consolidated income (loss) before income taxes, with no reconciling items.

The Company’s reportable segment, CODM, segment performance measures, and segment assets remain materially unchanged from

those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less. The Company

maintains cash balances at financial institutions, which at times may exceed federally insured limits. The Company has not

experienced any losses in such accounts and believes it faces no significant credit risk related to cash and cash equivalents.

The Company classifies cash as restricted when contractual or regulatory requirements limit its withdrawal or use for general

corporate purposes. The Company presents restricted cash as either a current or noncurrent asset based on the expected timing of the

•Amounts the Company holds as collateral for surety bonds or that state agencies require for well abandonment obligations; and

•Cash reserves the Company maintains for interest payments and fees related to its asset-backed securitization arrangements,

The Company’s accounting policy and the nature of its restricted cash arrangements remain consistent with those described in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2025, with no material changes during the interim period.

In the current year, the Company adopted the following accounting standards:


ASU Number	Description	Effective Date
ASU 2024-04	Debt—Debt with Conversion and Other Options	January 1, 2026
ASU 2025-05	Measurement of credit losses for accounts receivable and contract assets from transactions accounted for under Topic 606	January 1, 2026

The adoption of these standards did not significantly impact the Company’s Condensed Consolidated Financial Statements.

The following accounting standard has been issued but is not yet effective and has not been applied in the Condensed Consolidated


ASU Number	Description	Effective Date	Impact on Financial Statements
ASU 2026-02	Environmental Credits and Environmental Credit Obligations (Topic 818)	January 1, 2028	The Company is assessing the impact, but does not expect a material effect.

The Company will adopt this standard on the effective date. Based on preliminary assessment, the Company does not expect the

adoption of this standard to have a material impact on its consolidated financial statements.