Diversified Energy Co Liquidation Value

Diversified Energy Co presents a deeply negative liquidation posture as of March 31, 2026. MFFAIS reports a cash liquidation value of approximately -$3.9 billion, consistent with the balance sheet structure visible in this filing. Total assets of $6.24 billion are dominated by oil and gas property (gross $5.87 billion, net $4.46 billion after $1.41 billion accumulated DD&A) and a large deferred tax asset of $436 million — both of which receive severe haircuts under liquidation assumptions. Applying a 50-60% recovery to net O&G PP&E yields roughly $2.2-2.7 billion of asset recovery. Intangibles and deferred tax assets recover at zero. Accounts receivable of $412 million recovers at ~90-95%, contributing approximately $370-390 million. Cash of $55 million recovers at par. Restricted cash of $101 million is largely trapped in ABS structures and may not be freely available to general creditors. Total liability stack at face value is $5.49 billion, including: $2.93 billion gross debt (face value per DebtInstrumentCarryingAmount); asset retirement obligation of $896 million on a discounted basis ($3.63 billion undiscounted per contractual obligations table — the discounted balance remains on the balance sheet but the undiscounted gap is a material contingent claim); derivative liabilities net of assets at approximately $760 million net liability ($877 million gross derivative liabilities vs. $118 million derivative assets after netting); current liabilities of $1.34 billion including $265 million deferred revenue, $159 million accrued liabilities, and $337 million current derivative liabilities. The arithmetic confirms equity recovery is substantially negative before any distress discount. Key deterioration factors in this period: total borrowings held roughly stable at $2.9 billion (vs. $3.0 billion at year-end 2025), but interest expense surged 48% YoY to $63.4 million for the quarter, driven by ABS X Notes, Maverick ABS assumption, Nordic Bond tap, and ABS XI Notes. Net derivative position worsened materially — gross derivative fair value shows $1.11 billion fair value of liabilities vs. $347 million gross assets, a net liability of $760 million; the MD&A discloses natural gas derivatives alone at a $424 million net liability, NGLs at $113 million, oil at $222 million. The ARO undiscounted tail of $3.63 billion (vs. $896 million discounted balance sheet) represents a long-dated but real obligation that does not extinguish on windup and would be claimed at face value in a regulatory-mandated plugging scenario. Filing discusses firm transportation off-balance sheet obligations of $355 million (total $354 million per contractual table) not separately tagged in XBRL — these survive liquidation and would constitute additional claims. A $71 million share repurchase in Q1 2026 reduced cash available to creditors without reducing the liability stack.