Form 8-K/A
8-K/A — Diversified Energy Co
Accession: 0001922446-26-000095
Filed: 2026-09-18
Period: 2026-07-02
CIK: 0001922446
SIC: 1311 (CRUDE PETROLEUM & NATURAL GAS)
Item: Financial Statements and Exhibits
Documents
8-K/A — dec-20260702.htm (Primary)
EX-23.1 (exhibit231-consentofindepe.htm)
EX-99.1 (exhibit991-auditedfinancia.htm)
EX-99.2 (exhibit992-unauditedfinanc.htm)
EX-99.3 (exhibit993-unauditedprofor.htm)
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8-K/A
8-K/A (Primary)
Filename: dec-20260702.htm · Sequence: 1
dec-20260702
TRUE0001922446This Form 8-K/A amends the Current Report on Form 8-K filed on July 6, 2026 to amend Item 9.01 to present the required financial statements and pro forma financial information related to the acquisition of certain affiliates of Camino Natural Resources, LLC.00019224462026-07-022026-07-02
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 2026
Diversified Energy Company
(Exact name of registrant as specified in its charter)
Delaware
001-41870
41-2283606
(State or Other Jurisdiction of
Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
1600 Corporate Drive Birmingham,
Alabama
35242
(Address of Principal Executive Office)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (205) 408-0909
(Former Name or Former Address, if Changed Since Last Report): Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered, pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, par value $0.01 per share
DEC
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
On July 6, 2026, Diversified Energy Company (the "Company") filed with the Securities and Exchange Commission a Current Report
on Form 8-K (the "Original Report") to disclose, among other things, that it had completed its previously announced acquisition of
100% of the equity interests in certain affiliates of Camino Natural Resources, LLC ("Camino") owning certain oil and natural gas
wells, leasehold interests, undeveloped acreage and related assets located in Oklahoma.
The Company is hereby filing this Current Report on Form 8-K/A (this “Amendment”) to amend Item 9.01 of the Original Report to
present the required financial statements and pro forma financial information. Except for the filing of such financial statements and pro
forma financial information, this Amendment does not otherwise modify or update the Original Report.
Item 9.01
Financial Statements and Exhibits
(a)Financial Statements of Business Acquired
The audited consolidated financial statements of Camino Natural Resources Holdings, LLC and Subsidiaries as of and for the year
ended December 31, 2025 and 2024, and the related notes, and the unaudited condensed consolidated financial statements of Camino
Natural Resources Holdings, LLC and Subsidiaries as of March 31, 2026 and for the three months ended March 31, 2026 and 2025,
and the related notes, are filed herewith as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
(b)Pro Forma Financial Information
The unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026, and the unaudited pro forma
condensed combined statements of comprehensive income (loss) of the Company for the three months ended March 31, 2026 and for
the year ended December 31, 2025, and the notes thereto, are filed herewith as Exhibit 99.3 and are incorporated into this Item 9.01(b)
by reference.
(d)Exhibits
Exhibit No.
Description
23.1
Consent of Ernst & Young LLP, independent auditors for Camino Natural Resources Holdings, LLC and
Subsidiaries.
99.1
Audited consolidated financial statements of Camino Natural Resources Holdings, LLC and Subsidiaries as of and
for the years ended December 31, 2025 and 2024, and the related notes.
99.2
Unaudited condensed consolidated financial statements of Camino Natural Resources Holdings, LLC and
Subsidiaries as of March 31, 2026 and for the three months ended March 31, 2026 and 2025, and the related notes.
99.3
Unaudited pro forma condensed combined balance sheet of Diversified Energy Company as of March 31, 2026 and
unaudited pro forma condensed combined statements of comprehensive income (loss) of Diversified Energy
Company for the three months ended March 31, 2026 and for the year ended December 31, 2025, and the notes
thereto.
104
Cover Page Interactive Data File (embedded within Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Diversified Energy Company
September 17, 2026
By:
/s/ Benjamin M. Sullivan
Date
Benjamin M. Sullivan
Senior Executive Vice President, Chief Legal and
Risk Officer and Corporate Secretary
EX-23.1
EX-23.1
Filename: exhibit231-consentofindepe.htm · Sequence: 2
Exhibit 23.1 - Consent of Independent Auditors
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements:
(1)Registration Statement (Form S-3 No. 294145) of Diversified Energy Company
(2)Registration Statements (Form S-8 Nos. 333-287374 and 333-291764 and 333-276139) of Diversified
Energy Company
of our report dated April 14, 2026, relating to the consolidated financial statements of Camino Natural Resource
Holdings, LLC and Subsidiaries as of and for the years ended December 31, 2025 and 2024 appearing in this
Current Report on Form 8-K/A of Diversified Energy Company.
/s/ Ernst & Young LLP
Denver, Colorado
September 17, 2026
EX-99.1
EX-99.1
Filename: exhibit991-auditedfinancia.htm · Sequence: 3
Exhibit 99.1 - Audited financial statements of Camino
Exhibit 99.1
Consolidated Financial Statements
Camino Natural Resources Holdings, LLC and Subsidiaries
As of and for the years ended December 31, 2025 and 2024 and Report of
Independent Auditors
1
Ernst & Young LLP
370 17th Street
Suite 4800
Denver, CO 80202
Tel: +1 720 931 4000
Fax: +1 720 931 4444
ey.com
Report of Independent Auditors
The Board of Managers
Camino Natural Resources Holdings, LLC and Subsidiaries
Opinion
We have audited the consolidated financial statements of Camino Natural Resources Holdings,
LLC and Subsidiaries (the Company), which comprise the consolidated balance sheets as of
December 31, 2025 and 2024, and the related consolidated statements of operations, equity and
cash flows for the years then ended, and the related notes (collectively referred to as the "financial
statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Company at December 31, 2025 and 2024, and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS). Our responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Company and to meet our other ethical responsibilities in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for
the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of financial statements that are free of material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the Company's
ability to continue as a going concern for one year after the date that the financial statements are
available to be issued.
2
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free of material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will
always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in
the aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control. Accordingly, no such
opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the Company's ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
April 14, 2026
The accompanying notes are an integral part of these
consolidated financial statements.
3
Camino Natural Resources Holdings, LLC and Subsidiaries
Consolidated Balance Sheets
December 31,
2025
2024
(in thousands)
ASSETS
Current assets
Cash and cash equivalents ..................................................................................
$33,293
$27,257
Accounts receivable, net of allowance for doubtful accounts of $696 and
$549, respectively ..............................................................................................
87,403
63,317
Derivative instruments .......................................................................................
60,841
6,973
Prepaid and other current assets .........................................................................
1,562
1,746
Total current assets ..........................................................................................
183,099
99,293
Oil and natural gas properties, other property and equipment
Proved oil and natural gas properties, successful efforts method ......................
2,842,410
2,362,894
Accumulated depreciation, depletion and amortization .....................................
(985,265)
(788,532)
Unproved oil and natural gas properties ............................................................
318,364
374,782
Other property and equipment, net of accumulated depreciation of $5,016
and $4,278 respectively .....................................................................................
1,724
1,858
Total oil and natural gas properties, other property and equipment, net .........
2,177,233
1,951,002
Noncurrent assets
Investment in unconsolidated subsidiary ...........................................................
50,626
217,223
Derivative instruments .......................................................................................
14,269
1,299
Operating leases right-of-use assets ...................................................................
42,402
25,907
Other noncurrent assets ......................................................................................
8,619
7,453
Total assets .....................................................................................................
$2,476,248
$2,302,177
LIABILITIES
Current liabilities
Accounts payable ...............................................................................................
$33,942
$42,728
Accrued expenses ..............................................................................................
45,545
29,209
Revenue and royalties payable ...........................................................................
77,405
62,524
Derivative instruments .......................................................................................
—
4,713
Lease liabilities ..................................................................................................
45,215
12,524
Deferred drilling incentive .................................................................................
10,250
10,087
Other liabilities ..................................................................................................
10,821
12,715
Total current liabilities .....................................................................................
223,178
174,500
Noncurrent liabilities
Revolving credit facility ....................................................................................
415,000
270,000
Asset retirement obligations ...............................................................................
10,968
9,705
Derivative instruments .......................................................................................
418
10,068
Deferred drilling incentive .................................................................................
117,780
123,561
Lease liabilities ..................................................................................................
3,574
3,969
Other liabilities ..................................................................................................
380
171
Total liabilities .................................................................................................
771,298
591,974
Equity
Members' equity .................................................................................................
1,593,165
1,610,003
Non-controlling interest .....................................................................................
111,785
100,200
Total equity .......................................................................................................
1,704,950
1,710,203
Total liabilities and equity .................................................................................
$2,476,248
$2,302,177
The accompanying notes are an integral part of these
consolidated financial statements.
4
Camino Natural Resources Holdings, LLC and Subsidiaries
Consolidated Statements of Operations
For the Year Ended December 31,
2025
2024
(in thousands)
Revenues
Oil revenues ............................................................................................................
$230,881
$243,177
Oil revenues with affiliate .......................................................................................
2,427
1,582
Natural gas revenues ...............................................................................................
33,646
27,702
Natural gas revenues with affiliate ..........................................................................
214,332
107,664
Natural gas liquid revenues .....................................................................................
23,153
28,682
Natural gas liquid revenues with affiliate ................................................................
160,776
134,691
Total revenues .......................................................................................................
665,215
543,498
Operating expenses
Lease operating expenses ........................................................................................
48,908
37,825
Transportation, processing, gathering and other operating expense .......................
14,539
16,363
Transportation, processing, gathering and other operating expense with affiliate ..
119,012
81,824
Production taxes ......................................................................................................
30,818
25,751
Depreciation, depletion, amortization and accretion of asset retirement
obligations ...............................................................................................................
198,323
159,198
Exploration and impairment of unproved properties ...............................................
398
6,781
General and administrative expenses .......................................................................
24,908
21,278
Total operating expenses .......................................................................................
436,906
349,020
Loss on sale of oil and natural gas properties ..........................................................
3,405
1,709
Total operating income .........................................................................................
224,904
192,769
Other expense (income)
Interest expense .......................................................................................................
30,387
25,466
Net (gain) loss on derivative instruments ................................................................
(112,825)
6,073
Gain on disposition of equity method investment ...................................................
(61,425)
—
Income from equity investments .............................................................................
(9,488)
(16,614)
Other income ...........................................................................................................
(2,783)
(2,241)
Total other (income) expense ................................................................................
(156,134)
12,684
Net income ................................................................................................................
381,038
180,085
Net income attributable to non-controlling interest .................................................
22,845
12,020
Net income attributable to Camino Natural Resources Holdings, LLC .............
$358,193
$168,065
The accompanying notes are an integral part of these
consolidated financial statements.
5
Camino Natural Resources Holdings, LLC and Subsidiaries
Consolidated Statements of Equity
Total Members'
Equity
Non-Controlling
Interest
Total Equity
(in thousands)
Balance at December 31, 2023 .............................................
$1,576,516
$95,690
$1,672,206
Distributions ........................................................................
(134,411)
(7,500)
(141,911)
Deemed distribution to entity under common control .........
(167)
(10)
(177)
Net income ...........................................................................
168,065
12,020
180,085
Balance at December 31, 2024 .............................................
$1,610,003
$100,200
$1,710,203
Distributions ........................................................................
(374,886)
(11,250)
(386,136)
Deemed distribution to entity under common control .........
(145)
(10)
(155)
Net income ...........................................................................
358,193
22,845
381,038
Balance at December 31, 2025 .............................................
$1,593,165
$111,785
$1,704,950
The accompanying notes are an integral part of these
consolidated financial statements.
6
Camino Natural Resources Holdings, LLC and Subsidiaries
Consolidated Statements of Cash Flows
For the Year Ended December 31,
2025
2024
(in thousands)
Cash flows from operating activities
Net income ..............................................................................................................
$381,038
$180,085
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of asset retirement obligations ..............................................................
727
625
Depreciation, depletion and amortization .............................................................
197,596
158,573
Loss on sale of oil and natural gas properties .......................................................
3,405
1,709
Gain on disposition of equity method investment .................................................
(61,425)
—
Amortization of drilling incentive .........................................................................
(10,118)
(10,087)
(Gain) loss on derivative instruments ...................................................................
(112,825)
6,073
Net received for derivative settlements .................................................................
31,623
67,650
Amortization of lease liability ..............................................................................
32
490
Impairment of unproved properties .......................................................................
398
6,721
Amortization of debt issuance costs ......................................................................
1,920
1,660
Amortization of phantom units .............................................................................
210
—
Income from equity investments ...........................................................................
(9,488)
(16,614)
Changes in operating assets and liabilities:
Accounts receivable ..............................................................................................
(25,302)
306
Prepaid and other assets ........................................................................................
219
(5)
Accounts payable and other liabilities ..................................................................
19,353
(12,706)
Net cash provided by operating activities ...........................................................
417,363
384,480
Cash flows from investing activities
Acquisition of oil and natural gas properties ...........................................................
(6,203)
(2,511)
Development of oil and natural gas properties ........................................................
(398,562)
(285,620)
Proceeds from sales of oil and natural gas properties and other assets ...................
898
221
Purchases of other property and equipment .............................................................
(728)
(714)
Proceeds from sale of equity method investment ....................................................
287,511
—
Investment in equity method investment .................................................................
(50,000)
—
Distributions from unconsolidated affiliates ............................................................
—
42,861
Net cash used in investing activities .....................................................................
(167,084)
(245,763)
Cash flows from financing activities
Distributions ............................................................................................................
(374,886)
(134,411)
Distribution to non-controlling interest ...................................................................
(11,250)
(7,500)
Proceeds from revolving credit facility ...................................................................
195,000
95,000
Repayment of revolving credit facility ....................................................................
(50,000)
(80,000)
Deferred financing cost ...........................................................................................
(3,107)
(5,887)
Net cash used in financing activities .....................................................................
(244,243)
(132,798)
Increase in cash and cash equivalents ........................................................................
6,036
5,919
Cash and cash equivalents, beginning of period ........................................................
27,257
21,338
Cash and cash equivalents, end of period ..............................................................
33,293
27,257
Supplemental schedule of additional cash flow information:
Cash paid for interest ..............................................................................................
$25,683
$21,644
Lease liabilities .......................................................................................................
$59,614
$11,880
Change in accruals related capital expenditures ......................................................
$(6,739)
$(6,480)
7
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 - Organization
Camino Natural Resources Holdings, LLC, a Delaware Limited Liability Company, together with its subsidiaries
("Camino Holdings" or "the Company") is an independent oil and natural gas company focused on the acquisition,
optimization and development of crude oil and associated liquids rich natural gas reserves. The Company's assets are
concentrated in the Merge, STACK and SCOOP plays, located in the Anadarko Basin of Oklahoma.
The Company owns 92.5% of the outstanding membership interests in Camino Natural Resources, LLC ("Camino") and
its consolidated subsidiaries and 100% of the outstanding membership interests in Land Run Minerals II, LLC ("Land
Run"). The results of operations attributable to the non-controlling interest in Camino are presented within equity and net
income and are shown separately from the equity and net income attributable to the Company. Refer to the consolidated
statements of equity for a summary of activity attributable to the non-controlling interest.
The Company has a 10.1% ownership interest in Sterling Way Holdings, LLC ("Sterling Way"), which owns Iron Horse
Midstream Holdings, LLC, ("Iron Horse") a Delaware limited liability company and is accounted for as an equity
method investment. Iron Horse is a natural gas midstream business focused on gathering, transportation, processing and
treating assets. See Note 10 - Equity Method Investment for further details.
The Company is indirectly owned, through various entities, by NGP XI US Holdings, L.P ("NGP XI"), NGP XII US
Holdings, L.P ("NGP XII"), third party investors and management members. Together NGP XI and NGP XII, affiliates
of Natural Gas Partners ("NGP"), indirectly own approximately 76% of the Company.
Note 2 - Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP"). Our significant accounting policies are discussed below. All intercompany
accounts and transactions were eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect revenues, expenses, assets, liabilities and the disclosure of commitments and contingencies.
Changes in facts and circumstances or discovery of new information may result in revised estimates, and actual results
could differ from those estimates.
The Company's consolidated financial statements are based on a number of significant estimates, including estimates of
natural gas, NGLs and oil reserve quantities, which are the basis for the calculation of depletion and impairment of oil
and natural gas properties. Reserve estimates, by their nature, are inherently imprecise. Other items in the Company's
consolidated financial statements that involve the use of significant estimates include derivative assets and liabilities,
impairment of unproved properties, determining fair value and allocating purchase price in connection with business
combinations and asset acquisitions, asset retirement obligations and commitments and contingencies.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and investments readily convertible into cash, which have original
maturities of three months or less.
Accounts Receivable
Accounts receivable consists mainly of receivables from oil and natural gas purchasers and from joint interest owners on
properties the Company operates. For receivables from joint interest owners, the Company typically has the ability to
withhold future revenue disbursements to recover non-payment of joint interest billings. Accordingly, the Company's oil
and natural gas receivables are generally collected, and the Company has minimal bad debts.
Although diversified among many companies, collectability is dependent upon the financial wherewithal of each
individual company and is influenced by the general economic conditions of the industry. Receivables are not
collateralized, and the Company therefore establishes an allowance for doubtful accounts equal to the portions of its
accounts receivable for which collectability is not reasonably assured. As of December 31, 2025 and 2024, the Company
had an allowance for doubtful accounts of $0.7 million and $0.5 million, respectively.
8
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
The Company is subject to credit risk resulting from the concentration of its oil, natural gas and NGL receivables with
several significant purchasers. The future availability of a ready market for oil, natural gas and NGLs depends on
numerous factors outside the Company's control, none of which can be predicted with certainty. The Company does not
believe the loss of any single purchaser would materially impact its results of operations because oil, natural gas and
NGLs are fungible products with well-established markets and numerous purchasers. For the years ended December 31,
2025 and 2024, two purchasers accounted for approximately 88% and 84% of revenue, respectively.
Oil and Natural Gas Properties
Oil and natural gas producing activities are accounted for using the successful efforts method of accounting. Under this
method, the costs incurred to acquire, drill and complete development wells are capitalized to proved properties.
Exploration costs, including personnel and other internal costs, geological and geophysical expenses, delay rentals for oil
and natural gas leases and costs associated with unsuccessful lease acquisitions are charged to expense as incurred. Costs
of drilling exploratory wells are initially capitalized but are charged to expense if the well is determined to be
unsuccessful. As of December 31, 2025 and 2024, there were no costs capitalized in connection with exploratory wells.
Costs to operate, repair and maintain wells and field equipment are expensed as incurred.
Proved Properties
Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing
oil and natural gas are capitalized. All costs incurred to drill and equip successful exploratory wells, development wells,
development-type stratigraphic test wells and service wells, including unsuccessful development wells, are capitalized.
Capitalized costs are depleted on a unit-of-production method based on proved oil, natural gas and NGL reserves.
Net carrying values of retired, sold or abandoned properties that constitute less than a complete unit of depreciable
property are charged or credited, net of proceeds, to depreciation and amortization and accretion unless doing so
significantly affects the unit-of-production amortization rate, in which case a gain or loss is recognized. Gains or losses
from the disposal of complete units of depreciable property are recorded in the consolidated statements of operations.
The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances
indicate that a decline in the recoverability of its carrying value may have occurred. There were no impairments of
proved oil and natural gas properties for the years ended December 31, 2025 and 2024.
Unproved Properties
Unproved properties consist of costs to acquire undeveloped leases as well as costs to acquire unproved reserves and
they are both capitalized as incurred. These consist of costs incurred in obtaining a mineral interest or right in a property,
such as a lease in addition to broker fees, recording fees and other similar costs related to acquiring properties. Leasehold
costs are classified as unproved until proved reserves are discovered on or otherwise attributed to the property, at which
time related costs are transferred to proved oil and natural gas properties.
Unproved properties are routinely evaluated for continued capitalization or impairment. On a quarterly basis, the
Company assesses undeveloped leasehold costs for impairment by considering, among other things, remaining lease
terms, future drilling plans and capital availability to execute such plans, commodity price outlooks, recent operational
results, reservoir performance and geology, and estimated acreage value based on prices received for similar, recent
acreage transactions by the Company or other market participants. Changes in assumptions of the estimated
nonproductive portion of our undeveloped leases could result in additional impairment expense. During the years ended
December 31, 2025 and 2024, the Company recorded lease expirations of $0.4 million and $6.7 million, respectively,
included in impairment of unproved properties on the consolidated statements of operations.
Other Property and Equipment
Other property and equipment such as office furniture and equipment, buildings, vehicles and other computer hardware
and software is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives
of the assets ranging from three to twenty years. Major renewals and improvements are capitalized while expenditures
for maintenance and repairs are expensed as incurred. When other property and equipment is sold or retired, the
capitalized costs and related accumulated depreciation are removed from the accounts.
9
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Asset Retirement Obligations
The Company is obligated to dispose of certain long-lived assets upon their abandonment. The Company's asset
retirement obligations ("AROs") relate primarily to its obligation to plug and abandon oil and natural gas wells at the end
of their lives. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows
required to satisfy the retirement obligations, which is then discounted at the Company's credit-adjusted, risk-free interest
rate. Revisions to estimated AROs often result from changes in retirement cost estimates or changes in the estimated
timing of abandonment. The fair value of the liability is added to the carrying amount of the associated asset, and this
additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period
through charges to operating expense. For additional discussion, please refer to Note 8 - Asset Retirement Obligations.
Derivative Financial Instruments
In order to manage its exposure to natural gas, NGLs and oil price volatility, the Company enters into derivative
transactions from time to time, which may include commodity swap agreements, basis swap agreements, collar
agreements and other similar agreements related to the price risk associated with the Company's production. To the
extent the legal right of offset exists with a counterparty, the Company reports derivative assets and liabilities on a net
basis. The Company has exposure to credit risk to the extent that the counterparty is unable to satisfy its settlement
obligations. The Company actively monitors the creditworthiness of counterparties and assesses the impact, if any, on its
derivative positions.
The Company records derivative instruments on the consolidated balance sheets as either assets or liabilities measured at
fair value and records changes in the fair value of derivatives in current earnings as they occur. Changes in the fair value
of commodity derivatives, including gains or losses on settled derivatives, are classified as revenues on the Company's
consolidated statements of operations. The Company's derivatives have not been designated as hedges for accounting
purposes. For additional discussion, please refer to Note 6 - Derivative Financial Instruments.
Leases
The Company determines if an arrangement is, or contains, a lease at inception based on whether that contract conveys
the right to control the use of an identified asset in exchange for consideration for a period of time. Operating leases are
included in right-of-use assets ("ROU assets") and lease liabilities (current and non-current) in the consolidated balance
sheets. Financing leases are included in properties and equipment, net and lease liabilities (current and non-current) in
the consolidated balance sheets. Short-term leases (a lease that, at commencement, has a lease term of one year or less
and does not contain a purchase option that the Company is reasonably certain to exercise) are not recognized in ROU
assets and lease liabilities. For all operating leases, lease and non-lease components are accounted for as a single lease
component.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the
Company's obligation to make lease payments arising from the leases. ROU assets and lease liabilities are recognized at
the lease commencement date based on the present value of minimum lease payments over the lease term. Most leases do
not provide an implicit interest rate; therefore, the Company uses its incremental borrowing rate based on the information
available at the inception date to determine the present value of the lease payments. Lease terms include options to
extend the lease when it is reasonably certain that the Company will exercise that option. Lease cost for lease payments
is recognized on a straight-line basis over the lease term. Certain leases have payment terms that vary based on the usage
of the underlying assets. Variable lease payments are not included in ROU assets and lease liabilities. For additional
discussion, please refer to Note 11 - Commitments and Contingencies.
Revenue Recognition
The Company derives revenue primarily from the sale of produced oil, natural gas, and NGLs. Revenue is recognized
when a performance obligation is satisfied by transferring control of the produced oil, natural gas or NGLs to the
customer. For all commodity products, the Company records revenue in the month production is delivered to the
purchaser based on estimates of the amount of production delivered to the purchaser and the price the Company will
receive. Payments are generally received between 30 and 90 days after the date of production. Variances between
estimated sales and actual amounts received are insignificant and are recorded in the month payment is received.
10
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Payments for product sales are received one to three months after delivery. At the end of each month when the
performance obligation is satisfied and the amount of production delivered and the price received can be reasonably
estimated, amounts due from customers are accrued in accounts receivable trade, net in the consolidated balance sheets.
Under the Company's contracts, each monthly delivery of product represents a separate performance obligation,
therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining
performance obligations is not required.
Oil Sales
The Company's oil sales contracts are generally structured where it delivers oil to the purchaser at a contractually agreed-
upon delivery point at which the purchaser takes custody, title and risk of loss of the product. Under this arrangement,
the Company or a third party transports the product to the delivery point and receives a specified index price from the
purchaser with no deduction. In this scenario, the Company recognizes revenue when control transfers to the purchaser at
the delivery point based on the price received from the purchaser. Oil revenues are recorded net of any third-party
transportation fees and other applicable differentials in the Company's consolidated statements of operations.
Natural Gas and Natural Gas Liquids Sales
Under the Company's natural gas processing contracts, it delivers natural gas to a midstream processing entity at the
wellhead, battery facilities or the inlet of the midstream processing entity's system. The midstream processing entity
gathers and processes the natural gas and remits proceeds to the Company for the resulting sales of natural gas liquids
and residue gas. In these scenarios, the Company evaluates whether it is the principal or the agent in the transaction. For
those contracts where the Company has concluded it is the principal and the ultimate third party is its customer, the
Company recognizes revenue on a gross basis, with transportation, gathering, processing, treating and compression fees
presented as an expense in its consolidated statements of operations.
In certain natural gas processing agreements, the Company may elect to take its residue gas and/or natural gas liquids in-
kind at the tailgate of the midstream entity's processing plant and subsequently market the product. Through the
marketing process, the Company delivers product to the ultimate third-party purchaser at a contractually agreed-upon
delivery point and receives a specified index price from the purchaser. In this scenario, the Company recognizes revenue
when control transfers to the purchaser at the delivery point based on the index price received from the purchaser. The
gathering, processing, treating and compression fees attributable to the gas processing contract, as well as any
transportation fees incurred to deliver the product to the purchaser, are presented as transportation, gathering, processing,
treating and compression expense in the Company's consolidated statements of operations.
Taxes collected and remitted to governmental agencies on behalf of customers are not included in revenues or costs and
expenses.
Equity Method Investment
The Company accounts for its corporate joint ventures under the equity method of accounting in accordance with ASC
323, Investments - Equity Method and Joint Ventures. The Company applies the equity method of accounting to
investments of less than 50% in an investee over which the Company exercises significant influence but does not have
control, and investments of greater than 50% in an investee over which the Company does not exercise significant
influence or have control. Under the equity method of accounting, the Company's share of the investee's earnings or loss
is recognized in the consolidated statements of operations.
Judgment regarding the level of influence over each equity method investment includes considering key factors such as
ownership interest, representation on the board of directors, participation in policy-making decisions, material intra-
entity transactions and extent of ownership by an investor in relation to the concentration of other shareholdings.
Additionally, an investment in a limited liability company that maintains a specific ownership account for each investor
shall be viewed as similar to an investment in a limited partnership for purposes of determining whether a non-
controlling investment shall be accounted for using the cost method or the equity method.
The Company accounts for distributions received from equity method investees under the "nature of the distribution"
approach. Under this approach, distributions received from equity method investees are classified on the basis of the
nature of the activity or activities of the investee that generated the distribution as either a return on investment
11
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
(classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing
activities).
The Company reviews its investments to determine if a loss in value which is other than a temporary decline has
occurred. If such a loss has occurred, the Company recognizes an impairment provision. There were no impairments of
the Company's equity investments for the years ended December 31, 2025 and 2024. For additional discussion, please
refer to Note 10 - Equity Method Investments.
Incentive Units
Incentive units are accounted for as profit interests under ASC 718, Compensation - Stock Compensation ("ASC 718").
Incentive units participate in certain events where upon distributions are made to the incentive unit holders following a
qualifying distribution or initial public offering, sale, merger or other qualifying transaction ("Fundamental Change").
The fair value of incentive units, when considered probable, is determined based on the terms of the arrangement. As of
year-end, distribution to incentive unitholders was not deemed probable, therefore no expense was recognized to date or
for the year ended December 31, 2025.
Phantom Units
The Company periodically awards phantom units to certain employees as a long-term incentive plan. Each phantom unit
represents a hypothetical investment pursuant to which a participant is deemed to have made a capital contribution in
exchange for company interests. Holders of the phantom units will receive payments upon either of two events: 1)
interim distributions to equity interest owners and 2) a fundamental change. Both of the aforementioned events are
defined in the phantom unit plan document. A discretionary portion of the phantom units vest immediately on the grant
date, while the remainder of the phantom units granted are time-based units that vest 33.33% on each of the first three
anniversaries of the grant date so long as the participant remains an employee or independent contractor with the
Company. All obligations to the holders of phantom units will be settled with cash, and the phantom units will expire if a
fundamental change does not occur by the seventh anniversary of the grant date. Holders of the phantom units do not
have voting rights or any rights of ownership to or in any equity interest in, or assets of, the Company.
The Company accounts for these awards in accordance with ASC 450, Loss Contingencies ("ASC 450") and ASC 710,
Compensation - General. Expense associated with interim distributions will be recorded when payment is both probable
and reasonably estimable. Expense associated with a fundamental change will be recorded when a fundamental change
occurs as it is not considered probable until it occurs. For the years ended December 31, 2025 and 2024, the Company
recognized $5.0 million and $1.4 million, respectively, of general and administrative expense attributable to phantom
unit payments that occurred or were probable of occurring.
Income Taxes
The Company is a limited liability company treated as a pass-through entity for U.S. federal, state, and local income tax
purposes. Accordingly, members are taxed on their allocable share of taxable income or loss as determined under the
Company's operating agreement.
The Company has evaluated its tax positions and concluded that it has no uncertain tax positions. The Company
recognizes interest and penalties related to income taxes as income tax expense, of which there were none for the periods
presented.
Under the Internal Revenue Service ("IRS") rules, adjustments resulting from an IRS audit may be assessed at the
partnership level on behalf of its members. As of December 31, 2025, the Company has no tax years under audit.
12
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Note 3 - Accounts Receivable and Accrued Expenses
Accounts receivable are comprised of the following for the periods indicated:
December 31,
(in thousands)
2025
2024
Accrued oil, natural gas and NGL receivable .............................................................
$64,225
$47,910
Joint interest billings, net ............................................................................................
16,988
10,124
Receivables with entities under common control ........................................................
5,073
503
Other ...........................................................................................................................
1,117
4,780
Accounts receivable, net .............................................................................................
$87,403
$63,317
Accrued expenses are comprised of the following for the periods indicated:
December 31,
(in thousands)
2025
2024
Accrued capital expenditures .....................................................................................
$35,349
$22,062
Accrued lease operating expenses ..............................................................................
3,432
2,532
Other ..........................................................................................................................
6,764
4,615
Total ...........................................................................................................................
$45,545
$29,209
Revenue and royalties payables are comprised of the following for the periods indicated:
December 31,
(in thousands)
2025
2024
Revenue suspense ......................................................................................................
$60,622
$51,311
Accrued production taxes ..........................................................................................
2,148
1,299
Accrued revenue deductions ......................................................................................
13,750
9,491
Other ..........................................................................................................................
885
423
Total ...........................................................................................................................
$77,405
$62,524
Note 4 - Acquisitions and Divestitures
2025 Activity
Other Acquisitions
During the year ended December 31, 2025, the Company acquired from third parties, a combination of new leases and
additional working interests in wells it operates through a number of separate, individually insignificant negotiated
transactions for aggregate cash consideration of $6.2 million, all of which were accounted for as asset acquisitions.
2024 Activity
Other Acquisitions
During the year ended December 31, 2024, the Company acquired from third parties, a combination of new leases and
additional working interests in wells it operates through a number of separate, individually insignificant negotiated
transactions for aggregate cash consideration of $2.4 million, all of which were accounted for as asset acquisitions.
Note 5 - Debt
Credit Agreement
On May 3, 2024, Camino, as borrower, entered into an amended and restated credit agreement (the "Credit Agreement")
with JPMorgan Chase Bank, N.A. ("JPMorgan"), as administrative agent, and the lenders party thereto. In connection
with the Credit Agreement, Camino Holdings entered into an amended and restated security agreement, pursuant to
13
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
which Camino Holdings granted, on a non-recourse basis, liens and a security interest in all of its equity interests in
Camino.
On November 6, 2025, the Credit Agreement was amended pursuant to Amendment No. 1, which, among other things,
increased the borrowing base from $600.0 million to $800.0 million, increased aggregate elected commitments from
$500.0 million to $600.0 million, extended the maturity to November 6, 2029, eliminated the 0.10% credit spread
applicable to term SOFR borrowings, and modified the unused commitment fee to range from 0.375% to 0.50%.
Borrowings under the Credit Agreement bear interest, at the Company's option, at either (i) the alternate base rate
("ABR") plus an applicable margin ranging from 1.75% to 2.75%, or (ii) adjusted term SOFR plus 0.10% and an
applicable margin ranging from 2.75% to 3.75%, in each case based on utilization of the credit facility. ABR is defined
as the greatest of (a) the prime rate, (b) the Federal Reserve Bank of New York rate plus 0.5%, or (c) one-month adjusted
term SOFR plus 1.0%. Term SOFR borrowings may have one-, three- or six-month interest periods as selected by the
Company. Interest on SOFR borrowings is payable at the end of the applicable interest period, and interest on ABR
borrowings is payable quarterly in arrears.
Borrowings under the Credit Agreement are secured by first priority liens on substantially all of the Company's and its
subsidiaries' assets, including oil and natural gas properties representing at least 90% of the value of the Company's
proved reserves, subject to customary exceptions. Borrowing availability under the Credit Agreement is limited to the
lesser of the borrowing base and the aggregate elected commitments. The borrowing base is subject to semiannual
redeterminations, generally in the spring and fall, based primarily on the value of the Company's proved oil and natural
gas reserves.
At December 31, 2025, outstanding borrowings under the Credit Agreement were $415.0 million, with $185.0 million of
available borrowing capacity. The weighted average interest rate on borrowings was 7.61% and 8.46% for the years
ended December 31, 2025 and 2024, respectively.
The Credit Agreement contains customary financial covenants, including a requirement to maintain (i) a consolidated
total leverage ratio of less than 3.00 to 1.00 and (ii) a current ratio greater than 1.00 to 1.00. As of December 31, 2025,
the Company was in compliance with all financial covenants.
Debt Issuance Costs
Costs incurred in connection with the execution of the Company's credit agreement and any amendments thereto are
capitalized and amortized over the terms of the arrangement on a straight-line basis. As of December 31, 2025 and 2024,
unamortized debt issuance costs of $7.7 million and $6.5 million, respectively, were included in other non-current assets
on the consolidated balance sheets, stated at cost net of accumulated amortization. These costs are being amortized to
interest expense ratably over the life of the Credit Agreement, which approximates the effective interest method.
Note 6 - Derivative Financial Instruments
Commodity Contracts
The Company uses derivative instruments to mitigate volatility in commodity prices. While the use of these instruments
limits the downside risk of adverse price changes, their use may also limit future cash flow from favorable price changes.
The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a
specific volume of production, basis swaps to hedge the difference between the index price and a local index price, or
collars to establish fixed price floors and ceilings. All transactions are settled in cash with one party paying the other for
the resulting difference in price multiplied by the contract volume.
14
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
The following table summarizes the approximate volumes and average contract prices of swap contracts the Company
had in place as of December 31, 2025:
2026
2027
2028
Crude Oil Fixed Price Swaps:
Notional volumes (Bbl) ...........................................................
1,985,699
1,090,638
264,254
Weighted average floor price ($/Bbl) (1) ..................................
$66.00
$62.72
$62.73
Natural Gas Fixed Price Swaps:
Notional volumes (MMBtu) ....................................................
54,720,580
50,584,141
19,487,307
Weighted average ceiling price ($/MMBtu) ...........................
$3.82
$3.89
$3.77
Natural Gas Collars:
Notional volumes (MMBtu) ....................................................
590,000
—
—
Weighted average ceiling price ($/MMBtu) ............................
$6.90
$—
$—
Weighted average floor price ($/MMBtu) ...............................
$3.75
$—
$—
Natural Gas Basis Fixed Price Swaps:
Notional volumes (MMBtu) ....................................................
60,978,260
50,584,140
19,487,305
Weighted average price ($/MMBtu) ........................................
$(0.36)
$(0.38)
$(0.34)
Natural Gas Liquid Fixed Price Swaps:
Notional volumes (Bbl) ...........................................................
4,890,492
2,869,059
868,328
Weighted average price ($/Bbl) ...............................................
$29.43
$27.76
$26.92
(1)These crude oil swap transactions are settled based on the NYMEX WTI oil price on each trading day within the specified monthly settlement period
versus the contractual swap price for the volumes stipulated.
The following table presents the impact of the Company's derivative instruments for the periods presented:
Year Ended December 31,
(in thousands)
2025
2024
(Gain) loss on derivative instruments, net .................................................................
$(112,825)
$6,073
Offsetting of Derivative Assets and Liabilities.
The Company's commodity derivatives are included in the accompanying consolidated balance sheets as derivative
assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same
counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract
and in the event of default or termination of the contract.
15
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
The tables below summarize the fair value amounts and classification in the consolidated balance sheets of the
Company's derivative contracts outstanding at the respective balance sheet dates, as well as the gross recognized
derivative assets, liabilities and offset amounts:
(in thousands)
Balance Sheet
Classification
Gross
Amounts
Netting
Adjustments
Net Amounts
Presented on
the Balance
Sheet
December 31, 2025:
Assets:
Derivative instruments ...................
Current assets
$64,106
$(3,265)
$60,841
Derivative instruments ...................
Non-current assets
18,762
(4,493)
14,269
Total assets ..................................
$82,868
$(7,758)
$75,110
Liabilities:
Derivative instruments ...................
Current liabilities
$(3,265)
$3,265
$—
Derivative instruments ...................
Non-current liabilities
(4,911)
4,493
(418)
Total liabilities ............................
$(8,176)
$7,758
$(418)
December 31, 2024:
Assets:
Derivative instruments ...................
Current assets
$19,390
$(12,417)
$6,973
Derivative instruments ...................
Non-current assets
4,435
(3,136)
1,299
Total assets ..................................
$23,825
$(15,553)
$8,272
Liabilities:
Derivative instruments ...................
Current liabilities
$(17,130)
$12,417
$(4,713)
Derivative instruments ...................
Non-current liabilities
(13,204)
3,136
(10,068)
Total liabilities ............................
$(30,334)
$15,553
$(14,781)
Additional Disclosures about Derivative Instruments
The use of derivative instruments involves the risk that the counterparties will be unable to meet their obligations under
the agreements. The Company mitigates its exposure to any single counterparty by contracting with a number of
financial institutions, each of which have a high credit rating and is a member of its bank credit facility. The Company's
member banks do not require it to post collateral for its hedge liability positions.
Counterparties to the Company's derivative instruments are also lenders under its Credit Agreement. The Company's
Credit Agreement and derivative instruments contain certain cross default and acceleration provisions that may require
immediate payment of the Company's liabilities thereunder if the Company defaults on other material indebtedness. The
Company also has netting arrangements with each of its counterparties that allow it to offset assets and liabilities from
separate derivative contracts with that counterparty.
As of December 31, 2025, the Company had commodity derivative contracts with nine counterparties, all of which
are members of the Company's credit facility lender group.
Note 7 - Fair Value Measurements
The Company has categorized its assets and liabilities measured at fair value, based on the priority of inputs to the
valuation technique, into a three-level fair value hierarchy. Level 1 inputs are the highest priority and consist of
unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices
that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or
liability.
16
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Financial Assets and Liabilities
The following tables set forth by level within the fair value hierarchy the Company's financial assets and liabilities that
were accounted for at fair value on a recurring basis:
As of December 31, 2025
As of December 31, 2024
(in thousands)
Derivative
Assets
Derivative
Liabilities
Derivative
Assets
Derivative
Liabilities
Derivative assets/liabilities - current ...........................
$60,841
$—
$6,973
$(4,713)
Derivative assets/liabilities - non-current ....................
14,269
(418)
1,299
(10,068)
$75,110
$(418)
$8,272
$(14,781)
Both financial and non-financial assets and liabilities are categorized within the above fair value hierarchy based on the
lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a
particular input to the fair value measurement in its entirety requires judgement and considers factors specific to the asset
or liability. The following is a description of the valuation methodologies used by the Company as well as the general
classification of such instruments pursuant to the above fair value hierarchy. There were no transfers between any of the
fair value levels during any period presented.
Derivatives
The Company uses Level 2 inputs to measure the fair value of its oil and natural gas commodity derivatives. The
Company uses industry-standard models that consider various assumptions including current market and contractual
prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other
relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term
of the instrument and can be supported by observable data. The Company utilizes its counterparties' valuations to assess
the reasonableness of its own valuations. For additional discussion, please refer to Note 6 - Derivative Financial
Instruments for details of the gross and net derivative assets, liabilities and offset amounts as presented in the
consolidated balance sheets.
Other Financial Instruments
The carrying amount of cash and cash equivalents, receivables, prepaid expenses and other current assets, payables and
other accrued liabilities approximate their fair value due to the short-term maturities and/or liquid nature of these assets
and liabilities. The carrying value of the amounts outstanding under the Credit Agreement approximate fair value
because the variable interest rates are reflective of current market conditions.
Acquisitions of Proved and Unproved Properties
Assets acquired and liabilities assumed under transactions that meet the criteria of a business combination are recorded at
fair value on the acquisition date using an income valuation technique based on inputs that are not observable in the
market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and gas properties
include estimates of: (i) reserves; (ii) production rates; (iii) future operating and development costs; (iv) future
commodity prices, including price differentials; (v) future cash flows; and (vi) a market participant-based weighted
average cost of capital rate. These inputs require significant judgments and estimates by the Company's management at
the time of the valuation.
Assets acquired and liabilities assumed under transactions that do not meet the criteria of a business combination are
accounted for as an asset acquisition and are recorded based on the fair value of the total consideration transferred on the
acquisition date using the lowest observable inputs available.
17
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Note 8 - Asset Retirement Obligations
The following table summarizes changes in the Company's asset retirement obligations for the periods presented:
Year Ended December 31,
(in thousands)
2025
2024
Asset retirement obligations, beginning of period ......................................................
$9,705
$8,419
Additional liabilities incurred ...................................................................................
622
689
Liabilities settled and divested .................................................................................
—
(13)
Accretion expense ....................................................................................................
727
625
Revisions of estimated liabilities ..............................................................................
(86)
(15)
Asset retirement obligations, end of period ................................................................
$10,968
$9,705
Note 9 - Equity
The Company is governed by the third amended and restated limited liability agreement (the "LLC Agreement") dated
October 23, 2023. On July 1, 2024, the Company entered into amendment No. 1 to the LLC Agreement, which provides
that the Company shall be dissolved upon the occurrence of either of the following: 1) the sale, disposition or termination
of substantially all of the property then owned by the Company or 2) the consent in writing of the managing member.
Under the LLC Agreement no member will be liable for the debts, liabilities, contracts or other obligations of the
Company in excess of their contributed capital. Earnings and losses of the Company are allocated to the members'
separate capital accounts as set forth in the LLC Agreement, which are not necessarily consistent with each member's
ownership interest.
During the year ended December 31, 2025 and 2024, the Company recorded distributions of $374.9 million and $134.4
million, respectively.
Note 10 - Equity Method Investment
On July 15, 2025, the Company sold its previously held 40% equity method investment in Iron Horse as part of a sale
transaction to Sterling Way. As a result of the sale transaction, the Company derecognized its equity method investment
in Iron Horse. The Company received cash proceeds of $287.5 million as part of the sale transaction and recognized a
gain of $61.4 million, which is included in the consolidated statement of operations for the year ended December 31,
2025.
The Company elected to participate in the new ownership structure of Iron Horse through a 10.1% investment in Sterling
Way, which owns 100% of Iron Horse. In connection with the transaction, the Company contributed $50.0 million in
exchange for this investment. The investment in Sterling Way was initially recorded at cost of $50.0 million on the
transaction date and is accounted for under the equity method because the Company has the ability to exercise significant
influence.
There were no distributions received from Iron Horse during 2025. During 2024, the Company received $42.9 million in
distributions of cash from Iron Horse, which was included as a reduction in investment on the accompanying
consolidated balance sheets.
18
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
The following table is a reconciliation of investments in unconsolidated affiliates for the years ended December 31, 2024
and 2025:
(in thousands)
Iron Horse
Balance at December 31, 2023 ..................................................................................................................
$243,471
Distributions received ...............................................................................................................................
(42,861)
Income from equity method investment ....................................................................................................
16,613
Balance at December 31, 2024 ..................................................................................................................
$217,223
Distributions received ...............................................................................................................................
—
Income from equity method investment ....................................................................................................
8,862
Carrying value of investment derecognized upon sale ..............................................................................
(226,085)
Balance at December 31, 2025 ..................................................................................................................
$—
(in thousands)
Sterling Way
Balance at December 31, 2024 ..................................................................................................................
$—
Contribution on July 15, 2025 ...................................................................................................................
50,000
Distributions received ...............................................................................................................................
—
Income from equity method investment ....................................................................................................
626
Balance at December 31, 2025 ..................................................................................................................
$50,626
Note 11 - Commitments and Contingencies
Lease Commitments
At contract inception, the Company determines whether or not an arrangement contains a lease. Upon determination of a
lease, a ROU asset and related liability are recorded based on the present value of the future lease payments over the
lease term. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities
represent the obligation to make future lease payments arising from the lease.
The Company has operating leases for office equipment, compressor services, hydraulic fracturing services and other
leases. These leases have remaining terms ranging from one month to three years, including options to extend or early
terminate. These options are considered in determining the lease term and are included in the present value of future
payments that are recorded for leases when the Company is reasonably certain it will exercise the option. The Company
recognizes a right-of-use asset and lease liability on the balance sheet for all leases with lease terms of greater than one
year.
The following table presents the components of the Company's lease expenses for the periods presented:
Year Ended December 31,
Year Ended December 31,
(in thousands)
2025
2024
Operating lease costs ................................................................................................
$48,835
$37,200
Variable lease costs ..................................................................................................
700
2,391
Short-term lease costs ...............................................................................................
153,685
97,095
Total lease costs ..........................................................................................................
$203,220
$136,686
Lease costs disclosed above are presented on a gross basis. A portion of these costs may have been or will be billed to
other working interest owners. Our net share of these costs is included in various line items on the accompanying
statements of operations or capitalized to proved properties or other property and equipment on the accompanying
consolidated balance sheets, as applicable.
We recognize operating lease cost on a straight-line basis. Short-term lease costs are recognized as incurred and
represent payments for leases with a lease term of one year or less, excluding leases with a term of one month or less.
19
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
Maturities of lease liabilities are as follows:
As of
(in thousands)
December 31,
2026 ...........................................................................................................................................................
$46,619
2027 ...........................................................................................................................................................
901
2028 ...........................................................................................................................................................
922
2029 and after ............................................................................................................................................
2,473
Total undiscounted future lease payments .................................................................................................
50,915
Less present value discount .....................................................................................................................
(2,126)
Present value of lease liabilities .................................................................................................................
$48,789
The table below summarizes the Company's discount rate and remaining lease term as of the periods presented.
As of December 31,
2025
2024
Weighted-average discount rate (1) ...........................................................................
7.99%
7.91%
Weighted-average remaining lease term (years) ......................................................
1.10
2.26
(1)The Company's incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a
similar term and amount equal to the lease payments in a similar economic environment.
Contingencies
The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for
such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management,
the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of
operations, the financial position or the cash flows of the Company.
Note 12 - Related Party Transactions
Iron Horse Midstream Holding, LLC
In April 2018, the Company acquired a 40% equity interest in Iron Horse, a midstream company. On April 11, 2018, the
Company entered into a Gas Gathering, Processing and Purchase Agreement ("GGPPA") with Iron Horse to provide
gathering, processing and related services for the Company's production. The GGPPA does not contain minimum
volume commitments.
Contemporaneously with execution of the GGPPA, the Company and Iron Horse entered into a Side Letter Agreement
(the "Side Letter"), pursuant to which the Company dedicated production from its existing and future leasehold interests
in the SCOOP, MERGE and STACK plays in exchange for the opportunity to receive drilling incentive payments of up
to $183.3 million over a three-year period. The Company deferred recognition of these incentive payments and
recognizes the amounts as a reduction of gathering, processing and transportation expenses over the 20-year term of the
agreement.
On July 15, 2025, Sterling Way acquired Iron Horse. In connection with the transaction, Camino Holdings disposed of
its previously held 40% ownership interest in Iron Horse and received cash proceeds. For additional discussion, refer to
Note 10 - Equity Method Investments. Separately, Camino Holdings elected to participate as an investor in Sterling Way
and contributed $50.0 million in exchange for a 10.1% equity interest in Sterling Way. Following the transaction, Iron
Horse continues to operate as a subsidiary of Sterling Way.
Concurrent with the transaction, Camino entered into an amendment to its GGPPA with Iron Horse and executed a new
side letter agreement ("2025 side letter agreement") providing for potential drilling incentive payments for certain
qualifying wells. Incentive payments may be earned based on specified development milestones through December 31,
2027, subject to a maximum payment per well and an aggregate cap of approximately $62.0 million. Incentive payments,
if earned, will be recorded as deferred amounts and recognized as a reduction of gathering, processing and transportation
expenses over the remaining term of the amended GGPPA, which extends through April 11, 2053.
20
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Consolidated Financial Statements
As of December 31, 2025, Camino had received $4.5 million of drilling incentive payments under the 2025 side letter
agreement, which are recorded as deferred amounts and will be recognized as a reduction of gathering, processing and
transportation expenses over the remaining term of the amended GGPPA.
As of December 31, 2025, accounts receivable and accrued expenses on the accompanying consolidated balance sheets
include a $37.7 million receivable from Iron Horse and a $12.4 million payable to Iron Horse. As of December 31, 2024,
accounts receivable and accrued expenses include a $25.7 million receivable from Iron Horse and an $8.1 million
payable to Iron Horse.
Land Run Minerals II, LLC
Land Run Minerals II, LLC ("Land Run"), a wholly owned subsidiary of the Company, is the owner of certain mineral
interests operated by Camino. As of December 31, 2025 and 2024, revenue and royalties payable on the accompanying
consolidated balance sheets includes $0.5 million and $0.2 million due to Land Run, respectively.
WRC Energy Holdings, LLC and Shepherd Energy Holdings, LLC
In December 2021, Camino entered into a management services agreement with WRC Energy Holdings, LLC ("WRC"),
an NGP affiliated company. The agreement was amended on April 1, 2024, pursuant to which WRC reimburses the
Company for direct expenses attributable to WRC and an allocated portion of shared general and administrative
expenses. The allocation is based on the ratio of respective annual budgeted expenditures and lease operating expenses of
the Company and WRC. Prior to the amendment, WRC paid the Company a fixed annual management fee of $3.0
million, payable quarterly, and reimbursed direct expenses. The agreement was further amended in June 2025 to include
Shepherd Energy Holdings, LLC ("Shepherd"), under similar terms.
For the year ended December 31, 2025, the Company recorded $10.4 million of reimbursements for direct and shared
general and administrative expenses from WRC and Shepherd, of which $9.4M was attributable to WRC and $1.0
million was attributable to Shepherd. For the year ended December 31, 2024, the Company recorded $1.5 million of
management fees and $4.3 million of reimbursements for direct and shared general and administrative expenses from
WRC. All amounts received under the agreement are recorded as a reduction of general and administrative expenses in
the accompanying consolidated statements of operations.
Note 13 - Subsequent Events
The Company has evaluated subsequent events through April 14, 2026, the date the consolidated financial statements
were available to be issued. No subsequent events were identified requiring additional recognition or disclosure in the
accompanying consolidated financial statements.
21
Supplemental Disclosures of Oil and Natural Gas Activities (Unaudited)
Costs Incurred for Oil and Natural Gas Producing Activities
The following table sets forth the capitalized costs incurred in the Company's oil, natural gas and NGL production, and
development activities for the periods indicated:
Year Ended December 31,
(in thousands)
2025
2024
Acquisition costs:
Proved properties ..................................................................................................
$1,573
$4,126
Unproved properties ..............................................................................................
5,668
633
Development costs (1) .................................................................................................
404,253
289,842
Total ........................................................................................................................
$411,494
$294,601
(1)Development costs are net of $0.5 million and $0.7 million of asset retirement obligations incurred for the year ended December 31, 2025 and
2024, respectively.
Estimated Quantities of Proved Oil, Natural Gas and NGL Reserves
The reserve estimates presented below and included herein conform to the definitions and guidelines established by the
Securities and Exchange Commission ("SEC"). The Company retained Netherland, Sewell & Associates Inc., an
independent petroleum engineering firm, to prepare the estimates of all of its proved reserves as of December 31, 2025
and 2024 and their related pre-tax future net cash flows. The individuals performing reserves estimates possess
professional qualifications and demonstrate competency in reserves estimation and evaluation. The estimates of proved
reserves are inherently imprecise and are continually subject to revision based on production history, results of additional
exploration and development, price changes and other factors.
Reserve estimates are based on an unweighted arithmetic average of commodity prices during the 12-month period,
using the closing prices on the first day of each month, as defined by the SEC.
22
As of December 31, 2025, all of the Company's oil and natural gas reserves are attributable to properties within the
United States. The table below presents a summary of changes in quantities of proved oil and natural gas reserves in the
Company's estimated proved reserves:
Year Ended December 31,
2025
2024
Crude
Oil
MBbls
Natural
Gas
MMcf
Natural
Gas
Liquids
MBbls
Total
MBoe
Crude
Oil
MBbls
Natural
Gas
MMcf
Natural
Gas
Liquids
MBbls
Total
MBoe
Total proved reserves:
Beginning of the year ...........
30,258
978,412
84,901
278,229
31,012
908,716
79,242
261,706
Extensions, discoveries and
improved recovery ................
2,249
241,357
15,446
57,921
4,580
181,967
13,525
48,433
Revisions of previous
estimates ...............................
(3,667)
(51,896)
(2,715)
(15,032)
(2,023)
(41,355)
(1,503)
(10,416)
Divestitures of reserves in place
—
—
—
—
—
—
—
—
Production ............................
(3,746)
(81,519)
(7,640)
(24,973)
(3,311)
(70,916)
(6,363)
(21,494)
End of the year .....................
25,094
1,086,354
89,992
296,145
30,258
978,412
84,901
278,229
Proved Developed
Reserves:
Beginning of the year ...........
15,787
555,785
49,774
158,193
15,718
551,123
45,939
153,511
End of the year .....................
17,132
638,437
57,099
180,637
15,787
555,785
49,774
158,193
Proved Undeveloped
Reserves:
Beginning of the year ...........
14,471
422,628
35,127
120,036
15,294
357,593
33,303
108,195
End of the year .....................
7,961
447,917
32,894
115,508
14,471
422,628
35,127
120,036
Notable changes in proved reserves for the year ended December 31, 2025 included the following:
•The Company added 57,921 MBoe of proved reserves through extensions, primarily due to drilling activity.
•The Company had net negative revisions of 15,032 MBoe, which is primarily due to a change in the long-term
development plan due to well configurations. Additionally, lower weighted average sale prices resulted in
negative revisions due to economic well lives changing.
Notable changes in proved reserves for the year ended December 31, 2024 included the following:
•The Company added 48,433 MBoe of proved reserves through extensions, primarily due to drilling activity.
•The Company had net negative revisions of 10,417 MBoe, which is primarily due to a change in the long-term
development plan due to well configurations. Additionally, lower weighted average sale prices resulted in
negative revisions due to economic well lives changing.
Standardized Measure of Discounted Future Net Cash Flows
The standardized measure of discounted future net cash flows (the "Standardized Measure") relating to proved oil and
natural gas reserves has been prepared in accordance with ASC 932, Extractive Activities - Oil and Gas ("ASC 932").
Future cash inflows as of December 31, 2025 and 2024 have been computed by applying average fiscal year prices
(calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month
periods ended December 31, 2025 and 2024, respectively) to estimated future production. Future production and
development costs are computed by estimating the expenditures to be incurred in developing and producing the proved
oil and natural gas reserves, based on year-end costs and assuming the continuation of existing economic conditions. The
Standardized Measure also includes costs for future dismantlement, abandonment and rehabilitation obligations.
The projections should not be viewed as realistic estimates of future cash flows, nor should the Standardized Measure be
interpreted as representing current value of the Company. Material revisions to estimates of proved reserves may occur
23
in the future; development and production of the reserves may not occur in the periods assumed; actual prices realized
are expected to vary significantly from those used; and actual costs may vary.
The Standardized Measure of discounted future net cash flows relating to proved reserves is presented in the table below
for the periods indicated:
Year Ended December 31,
(in thousands)
2025
2024
Future cash inflows ....................................................................................................
$7,302,406
$6,485,341
Future development costs ..........................................................................................
(3,472,973)
(3,080,155)
Future production costs ..............................................................................................
(543,798)
(687,843)
Future net cash flows .................................................................................................
3,285,635
2,717,343
10% discount to reflect timing of cash flows .............................................................
(1,560,040)
(1,273,264)
Standardized measure of discounted future net cash flows .......................................
$1,725,595
$1,444,079
The Company is treated as a partnership and therefore is not subject to federal income taxes.
The following table summarizes the principal sources in the Standardized Measure of discounted future net cash flows
and such changes have been computed in accordance with ASC 932:
Year Ended December 31,
(in thousands)
2025
2024
Standardized measure of discounted future net cash flows at beginning of the
period .........................................................................................................................
$1,444,079
$1,655,115
Sales of oil, natural gas, and NGLs, net of production costs .....................................
(448,178)
(375,237)
Extensions and discoveries, net of future development costs ....................................
200,099
114,076
Change in estimated development costs ....................................................................
213,698
208,495
Net changes in prices and production costs ...............................................................
249,575
(301,016)
Changes in estimated future development costs ........................................................
64,205
44,608
Revisions of previous quantity estimates ...................................................................
(34,314)
(83,233)
Accretion of discount .................................................................................................
144,408
165,511
Net changes in timing of production and other ..........................................................
(107,977)
15,760
Standardized measure of discounted future net cash flows at end of the period ........
$1,725,595
$1,444,079
Future net revenues included in the Standardized Measure relating to proved oil and natural gas reserves incorporate
weighted average sale prices (inclusive of adjustments for transportation, quality and basis differentials) for each of the
periods indicated below:
Year Ended December 31,
2025
2024
Oil (per Bbl) ..............................................................................................................
$65.34
$75.48
Natural gas (per Mcf) .................................................................................................
$3.62
$2.35
NGLs (per Bbl) ..........................................................................................................
$25.02
$25.58
EX-99.2
EX-99.2
Filename: exhibit992-unauditedfinanc.htm · Sequence: 4
Exhibit 99.2 - Unaudited financial statements of Camino
Exhibit 99.2
Condensed Consolidated Financial Statements (Unaudited)
Camino Natural Resources Holdings, LLC and Subsidiaries
As of March 31, 2026 and December 31, 2025 and for the Three Months
Ended March 31, 2026 and 2025
See accompanying notes to unaudited condensed consolidated financial statements.
1
Camino Natural Resources Holdings, LLC and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31,
2026
December 31,
2025
ASSETS
Current assets
Cash and cash equivalents .....................................................................................
$43,232
$33,293
Accounts receivable, net of allowance for doubtful accounts of $637 and $696,
respectively ............................................................................................................
92,791
87,403
Derivative instruments ...........................................................................................
9,808
60,841
Prepaid and other current assets ............................................................................
1,557
1,562
Total current assets ..............................................................................................
147,388
183,099
Oil and natural gas properties, other property and equipment
Proved oil and natural gas properties, successful efforts method ..........................
2,928,657
2,842,410
Accumulated depreciation, depletion and amortization ........................................
(1,028,183)
(985,265)
Unproved oil and natural gas properties ................................................................
314,192
318,364
Other property and equipment, net of accumulated depreciation of $5,374 and
$5,016 respectively ................................................................................................
1,527
1,724
Total oil and natural gas properties, other property and equipment, net .............
2,216,193
2,177,233
Noncurrent assets
Investment in unconsolidated subsidiary ...............................................................
51,606
50,626
Derivative instruments ...........................................................................................
3,294
14,269
Operating leases right-of-use assets .......................................................................
26,057
42,402
Other noncurrent assets ..........................................................................................
8,160
8,619
Total assets ..............................................................................................................
$2,452,698
$2,476,248
LIABILITIES AND EQUITY
Current liabilities
Accounts payable ...................................................................................................
$46,014
$33,942
Accrued expenses ..................................................................................................
38,021
45,545
Revenue and royalties payable ...............................................................................
74,716
77,405
Derivative instruments ...........................................................................................
36,388
–
Lease liabilities ......................................................................................................
22,217
45,215
Deferred drilling incentive .....................................................................................
10,250
10,250
Other liabilities ......................................................................................................
10,780
10,821
Total current liabilities .........................................................................................
238,386
223,178
Noncurrent liabilities
Revolving credit facility ........................................................................................
420,000
415,000
Asset retirement obligations ..................................................................................
11,305
10,968
Derivative instruments ...........................................................................................
5,411
418
Deferred drilling incentive .....................................................................................
115,217
117,780
Lease liabilities ......................................................................................................
3,421
3,574
Other liabilities ......................................................................................................
570
380
Total liabilities .....................................................................................................
794,310
771,298
Equity
Members' equity ....................................................................................................
1,550,283
1,593,165
Non-controlling interest .........................................................................................
108,105
111,785
Total equity .........................................................................................................
1,658,388
1,704,950
Total liabilities and equity .....................................................................................
$2,452,698
$2,476,248
See accompanying notes to unaudited condensed consolidated financial statements.
2
Camino Natural Resources Holdings, LLC and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands)
Three Months Ended March 31,
2026
2025
Revenues
Oil revenues ............................................................................................................
$54,789
$45,125
Oil revenues with affiliate .......................................................................................
481
171
Natural gas revenues ...............................................................................................
9,786
12,401
Natural gas revenues with affiliate ..........................................................................
67,527
49,956
Natural gas liquid revenues .....................................................................................
4,653
7,188
Natural gas liquid revenues with affiliate ...............................................................
36,963
34,235
Total revenues .......................................................................................................
174,199
149,076
Operating expenses
Lease operating expenses ........................................................................................
16,898
9,654
Transportation, processing, gathering and other operating expense .......................
2,671
4,585
Transportation, processing, gathering and other operating expense with affiliate ..
30,243
22,525
Production taxes ......................................................................................................
8,015
6,953
Depreciation, depletion, amortization and accretion of asset retirement
obligations ...............................................................................................................
43,478
42,704
Leasehold expirations ..............................................................................................
131
238
General and administrative expenses ......................................................................
3,354
4,547
Total operating expenses ......................................................................................
104,790
91,206
Loss on sale of oil and natural gas properties .........................................................
(180)
(629)
Total operating income ...........................................................................................
69,229
57,241
Other expense (income)
Interest expense .......................................................................................................
8,465
6,714
Net loss on derivative instruments ..........................................................................
109,156
47,661
Income from equity investments .............................................................................
(980)
(3,803)
Other income ...........................................................................................................
(850)
(720)
Total other income expense ..................................................................................
115,791
49,852
Net (loss) income ......................................................................................................
(46,562)
7,389
Net (loss) income attributable to non-controlling interest ......................................
(3,680)
191
Net (loss) income attributable to Camino Natural Resources Holdings, LLC ...
$(42,882)
$7,198
See accompanying notes to unaudited condensed consolidated financial statements.
3
Camino Natural Resources Holdings, LLC and Subsidiaries
Unaudited Condensed Consolidated Statements of Equity
(in thousands)
Members' Equity
Non-Controlling
Interest
Total Equity
Balance at December 31, 2025 ...............................
$1,593,165
$111,785
$1,704,950
Net loss ..................................................................
(42,882)
(3,680)
(46,562)
Balance at March 31, 2026 ....................................
$1,550,283
$108,105
$1,658,388
Balance at December 31, 2024 ...............................
$1,610,003
$100,200
$1,710,203
Distributions ..........................................................
(49,275)
(3,750)
(53,025)
Net income .............................................................
7,198
191
7,389
Balance at March 31, 2025 ....................................
$1,567,926
$96,641
$1,664,567
See accompanying notes to unaudited condensed consolidated financial statements.
4
Camino Natural Resources Holdings, LLC and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended March 31,
2026
2025
Cash flows from operating activities
Net (loss) income ...................................................................................................
$(46,562)
$7,389
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Accretion of asset retirement obligations ............................................................
201
173
Depreciation, depletion and amortization ...........................................................
43,277
42,531
Loss on sale of oil and natural gas properties .....................................................
180
629
Leasehold expirations ..........................................................................................
131
238
Amortization of drilling incentive .......................................................................
(2,563)
(2,522)
(Gain) loss on derivative instruments ..................................................................
109,156
47,661
Net received for derivative settlements ...............................................................
(5,766)
(966)
Income from equity investments .........................................................................
(980)
(3,803)
Other ....................................................................................................................
684
544
Changes in operating assets and liabilities:
Accounts receivable ............................................................................................
(1,762)
(4,609)
Prepaid and other assets ......................................................................................
3
12
Accounts payable and other liabilities .................................................................
5,156
(1,320)
Net cash provided by operating activities .........................................................
101,155
85,957
Cash flows from investing activities
Acquisition of oil and natural gas properties .........................................................
(8,325)
(707)
Development of oil and natural gas properties ......................................................
(87,865)
(99,485)
Proceeds from sales of oil and natural gas properties and other assets .................
166
798
Purchases of other property and equipment ...........................................................
(161)
(119)
Net cash used in investing activities ....................................................................
(96,185)
(99,513)
Cash flows from financing activities
Distributions ..........................................................................................................
–
(49,275)
Distribution to non-controlling interest .................................................................
–
(3,750)
Proceeds from revolving credit facility .................................................................
15,000
50,000
Repayment of revolving credit facility ..................................................................
(10,000)
–
Deferred financing cost ..........................................................................................
(31)
(10)
Net cash provided (used) in financing activities .................................................
4,969
(3,035)
Increase (decrease) in cash and cash equivalents .....................................................
9,939
(16,591)
Cash and cash equivalents, beginning of period ......................................................
33,293
27,257
Cash and cash equivalents, end of period ............................................................
$43,232
$10,666
Supplemental schedule of additional cash flow information:
Cash paid for interest ...............................................................................................
$7,364
$5,534
Lease liabilities .........................................................................................................
$2,438
$–
Change in accruals related capital expenditures ......................................................
$6,964
$(14,090)
5
Camino Natural Resources Holdings, LLC and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 - Organization
Camino Natural Resources Holdings, LLC, a Delaware limited liability company, together with its subsidiaries ("Camino
Holdings" or the "Company"), is an independent oil and natural gas company focused on the acquisition, development
and optimization of crude oil and liquids-rich natural gas reserves in the Merge, STACK and SCOOP plays of the
Anadarko Basin in Oklahoma.
The Company owns a 92.5% membership interest in Camino Natural Resources, LLC ("Camino") and a 100%
membership interest in Land Run Minerals II, LLC ("Land Run"). The non-controlling interest in Camino is presented
separately within equity and net income in the accompanying unaudited condensed consolidated financial statements.
The Company also owns a 10.1% interest in Sterling Way Holdings, LLC ("Sterling Way"), which owns Iron Horse
Midstream Holdings, LLC ("Iron Horse"), a natural gas midstream business focused on gathering, transportation,
processing and treating assets. The investment is accounted for under the equity method.
The Company is indirectly owned by affiliates of Natural Gas Partners ("NGP"), third-party investors and management
members. Affiliates of NGP collectively own approximately 76% of the Company.
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States ("GAAP") applicable to interim financial information.
Accordingly, certain information and disclosures normally included in annual financial statements prepared in
conformity with GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements
should be read in conjunction with the Company's audited consolidated financial statements and related notes thereto as
of and for the year ended December 31, 2025.
In the opinion of management, all adjustments, consisting only of normal recurring adjustments and accruals, considered
necessary to present fairly, in all material respects, the Company's financial position, results of operations and cash flows
for the interim periods presented have been included. Operating results for the interim periods presented are not
necessarily indicative of the results that may be expected for the full year or any future period.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly and
majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Note 3 - Accounts Receivable and Accrued Expenses
Accounts receivable are comprised of the following for the periods indicated:
(in thousands)
March 31, 2026
December 31, 2025
Accrued oil, natural gas and NGL receivable .........................................
$61,139
$64,225
Joint interest billings, net ........................................................................
22,520
16,988
Receivables with entities under common control ...................................
6,018
5,073
Other .......................................................................................................
3,114
1,117
Accounts receivable, net .........................................................................
$92,791
$87,403
Accrued expenses are comprised of the following for the periods indicated:
(in thousands)
March 31, 2026
December 31, 2025
Accrued capital expenditures ..................................................................
$26,023
$35,349
Accrued lease operating expenses ..........................................................
3,310
3,432
Other .......................................................................................................
8,688
6,764
Total ........................................................................................................
$38,021
$45,545
6
Revenue and royalties payables are comprised of the following for the periods indicated:
(in thousands)
March 31, 2025
December 31, 2025
Revenue suspense ...................................................................................
$61,290
$60,622
Accrued production taxes .......................................................................
1,971
2,148
Accrued revenue deductions ...................................................................
11,159
13,750
Other .......................................................................................................
296
885
Total ........................................................................................................
$74,716
$77,405
Note 4 - Debt
Credit Agreement
Camino has a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A., as administrative
agent, that provides for a secured revolving credit facility (the "Credit Agreement").
As of March 31,2026, the borrowing base to $800.0 million, increase elected commitments to $600.0 million, and the
maturity date to November 6, 2029.
Borrowing availability under the Credit Agreement is limited to the lesser of the borrowing base and elected
commitments. The borrowing base is subject to semiannual redeterminations based primarily on the value of the
Company's proved oil and natural gas reserves.
Borrowings under the Credit Agreement may be alternate base rate ("ABR") loans or term SOFR loans. ABR loans bear
interest at the greatest of the prime rate, the Federal Reserve Bank of New York rate plus 0.50%, or one-month adjusted
term SOFR plus 1.00%, plus an applicable margin ranging from 1.75% to 2.75%. SOFR loans bear interest at adjusted
term SOFR plus an applicable margin ranging from 2.75% to 3.75%, in each case based on utilization of the credit
facility.
The Credit Agreement is secured by substantially all of the Company's and its subsidiaries' assets, subject to customary
exceptions.
At March 31, 2026, outstanding borrowings under the Credit Agreement were $420.0 million, with available borrowing
capacity of $180.0 million. At December 31, 2025, outstanding borrowings under the Credit Agreement were $415.0
million, with $185.0 million of available borrowing capacity.
The Credit Agreement contains customary financial covenants, including leverage ratio and current ratio requirements.
As of March 31, 2026, the Company was in compliance with all financial covenants.
Note 5 - Derivative Instruments
Commodity Contracts
The Company uses derivative instruments to mitigate volatility in commodity prices. While the use of these instruments
limits the downside risk of adverse price changes, their use may also limit future cash flow from favorable price changes.
The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a
specific volume of production, basis swaps to hedge the difference between the index price and a local index price, or
collars to establish fixed price floors and ceilings. All transactions are settled in cash with one party paying the other for
the resulting difference in price multiplied by the contract volume.
7
The following table summarizes the approximate volumes and average contract prices of swap contracts the Company
had in place as of March 31, 2026:
2026
2027
2028
Crude Oil Fixed Price Swaps:
Notional volumes (Bbl) ...................................................
1,657,781
1,676,231
592,580
Weighted average floor price ($/Bbl) (1) .........................
$64.99
$62.42
$64.87
Natural Gas Fixed Price Swaps:
Notional volumes (MMBtu) ............................................
39,343,821
54,177,820
31,377,558
Weighted average ceiling price ($/MMBtu) ...................
$3.83
$3.90
$3.77
Natural Gas Basis Fixed Price Swaps:
Notional volumes (MMBtu) ............................................
44,512,879
54,177,820
31,377,555
Weighted average price ($/MMBtu) ...............................
$(0.56)
$(0.39)
$(0.40)
Natural Gas Liquid Fixed Price Swaps:
Notional volumes (Bbl) ...................................................
4,228,612
4,163,456
868,328
Weighted average price ($/Bbl) ......................................
$29.49
$28.51
$26.92
(1)These crude oil swap transactions are settled based on the NYMEX WTI oil price on each trading day within the specified monthly
settlement period versus the contractual swap price for the volumes stipulated.
Derivative Instrument Reporting. The Company's oil and natural gas derivative instruments have not been designated as
hedges for accounting purposes. Therefore, all gains and losses are recognized in the Company's unaudited condensed
consolidated statements of operations. All derivative instruments are recorded at fair value in the unaudited condensed
consolidated balance sheets, other than derivative instruments that meet the "normal purchase normal sale" exclusion,
and any fair value gains and losses are recognized in current period earnings.
The following table presents the impact of the Company's derivative instruments for the periods presented:
(in thousands)
Three Months Ended March 31,
2026
2025
Loss on derivative instruments, net .....................................................................
$109,156
$47,661
Offsetting of Derivative Assets and Liabilities.
The Company's commodity derivatives are included in the accompanying unaudited condensed consolidated balance
sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts
executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over
the term of the contract and in the event of default or termination of the contract.
The tables below summarize the fair value amounts and classification in the unaudited condensed consolidated balance
sheets of the Company's derivative contracts outstanding at the respective balance sheet dates, as well as the gross
recognized derivative assets, liabilities and offset amounts:
(in thousands)
Balance Sheet
Classification
Gross Amounts
Netting
Adjustments
Net Amounts
Presented on
the Balance
Sheet
March 31, 2026:
Assets:
Derivative instruments ........
Current assets
$37,411
$(27,603)
$9,808
Derivative instruments ........
Non-current assets
17,179
(13,885)
3,294
Total assets .......................
$54,590
$(41,488)
$13,102
Liabilities:
Derivative instruments ........
Current liabilities
$(63,991)
$27,603
$(36,388)
Derivative instruments ........
Non-current liabilities
(19,296)
13,885
(5,411)
Total liabilities ..................
$(83,287)
$41,488
$(41,799)
8
(in thousands)
Balance Sheet
Classification
Gross Amounts
Netting
Adjustments
Net Amounts
Presented on
the Balance
Sheet
December 31, 2025:
Assets:
Derivative instruments ........
Current assets
$64,106
$(3,265)
$60,841
Derivative instruments ........
Non-current assets
18,762
(4,493)
14,269
Total assets .......................
$82,868
$(7,758)
$75,110
Liabilities:
Derivative instruments ........
Current liabilities
$(3,265)
$3,265
$–
Derivative instruments ........
Non-current liabilities
(4,911)
4,493
(418)
Total liabilities ..................
$(8,176)
$7,758
$(418)
Additional Disclosures about Derivative Instruments
The use of derivative instruments involves the risk that the counterparties will be unable to meet their obligations under
the agreements. The Company mitigates its exposure to any single counterparty by contracting with a number of
financial institutions, each of which have a high credit rating and is a member of its bank credit facility. The Company's
member banks do not require it to post collateral for its hedge liability positions.
Counterparties to the Company's derivative instruments are also lenders under its Credit Agreement. The Company's
Credit Agreement and derivative instruments contain certain cross default and acceleration provisions that may require
immediate payment of the Company's liabilities thereunder if the Company defaults on other material indebtedness. The
Company also has netting arrangements with each of its counterparties that allow it to offset assets and liabilities from
separate derivative contracts with that counterparty.
As of March 31, 2026 and December 31, 2025, respectively the Company had commodity derivative contracts with nine
counterparties, all of which are members of the Company's credit facility lender group.
Note 6 - Fair Value Measurements
The Company has categorized its assets and liabilities measured at fair value, based on the priority of inputs to the
valuation technique, into a three-level fair value hierarchy. Level 1 inputs are the highest priority and consist of
unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices
that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or
liability.
Financial Assets and Liabilities
The following tables set forth by level within the fair value hierarchy the Company's financial assets and liabilities that
were accounted for at fair value on a recurring basis:
As of March 31, 2026
As of December 31, 2025
(in thousands)
Derivative
Assets
Derivative
Liabilities
Derivative
Assets
Derivative
Liabilities
Derivative assets/liabilities - current ...............
$9,808
$(36,388)
$60,841
$–
Derivative assets/liabilities - non-current ........
3,294
(5,411)
14,269
(418)
$13,102
$(41,799)
$75,110
$(418)
Both financial and non-financial assets and liabilities are categorized within the fair value hierarchy based on the lowest
level of input that is significant to the fair value measurement. The following describes the valuation methodologies used
by the Company for instruments measured at fair value. There were no transfers between fair value hierarchy levels
during the periods presented.
9
Derivatives
The Company uses Level 2 inputs to measure the fair value of its oil and natural gas commodity derivatives. The
Company uses industry-standard models that consider various assumptions including current market and contractual
prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other
relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term
of the instrument and can be supported by observable data. The Company utilizes its counterparties' valuations to assess
the reasonableness of its own valuations. For additional discussion, please refer to Note 4 - Derivative Financial
Instruments for details of the gross and net derivative assets, liabilities and offset amounts as presented in the unaudited
condensed consolidated balance sheets.
Other Financial Instruments
The carrying amount of cash and cash equivalents, receivables, prepaid expenses and other current assets, payables and
other accrued liabilities approximate their fair value due to the short-term maturities and/or liquid nature of these assets
and liabilities. The carrying value of the amounts outstanding under the Credit Agreement approximate fair value
because the variable interest rates are reflective of current market conditions.
Note 7 - Commitments and Contingencies
Lease Commitments
The Company leases office space, equipment, compressor services, hydraulic fracturing services, and other assets under
operating lease arrangements. There have been no material changes to the Company's lease arrangements from those
disclosed in the audited consolidated financial statements as of and for the year ended December 31, 2025.
Commitments
The Company routinely enters into, extends or amends operating agreements in the ordinary course of business. There
has been no material, non-routine changes in commitments during the three months ended March 31, 2026.
Contingencies
The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for
such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management,
the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of
operations, the financial position or the cash flows of the Company.
Note 8 - Related Party Transactions
Iron Horse Midstream Holding, LLC
On July 15, 2025, the Company entered into a Gathering, Processing and Transportation Agreement ("GGPA") with Iron
Horse, together with related side letter arrangements, which provide for potential drilling incentive payments associated
with certain qualifying wells through December 31, 2027. Any incentive payments received are deferred and recognized
as reductions of gathering, processing and transportation expense over the remaining term of the GGPA. During the three
months ended March 31, 2026, the Company did not receive any drilling incentive payments under these arrangements.
As of March 31, 2026 and December 31, 2025, accounts receivable included amounts due from Iron Horse of $29.7
million and $37.7 million, respectively, and accrued liabilities included amounts due to Iron Horse of $10.2 million and
$12.4 million, respectively.
Land Run Minerals II, LLC
Land Run, a wholly owned subsidiary of the Company, owns certain mineral interests operated by Camino. As of March
31, 2026 and December 31, 2025, revenue and royalties payable included $0.4 million and $0.5 million due to Land Run,
respectively.
10
WRC Energy Holdings, LLC and Shepherd Energy Holdings, LLC
The Company has a management services agreement with WRC Energy Holdings, LLC ("WRC") and Shepherd Energy
Holdings, LLC ("Shepherd"), entities affiliated with NGP, pursuant to which the Company is reimbursed for certain
direct and shared general and administrative expenses. Reimbursements are recorded as reductions of general and
administrative expense in the accompanying unaudited condensed consolidated statements of operations.
For the three months ended March 31, 2026, the Company recorded $4.8 million of reimbursements for direct and shared
general and administrative expenses from WRC and Shepherd, of which the majority was attributable to WRC. For the
three months ended March 31, 2025, the Company recorded $1.6 million of reimbursements for direct and shared general
and administrative expenses from WRC.
Note 9 - Subsequent Events
The Company has evaluated subsequent events through July 22, 2026, the date the unaudited condensed consolidated
financial statements were available to be issued.
On May 6, 2026, Diversified Gas & Oil Corporation, a wholly owned subsidiary of Diversified Energy Company
("Diversified"), entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain affiliates of
Camino Natural Resources Holdings, LLC pursuant to which Diversified agreed to acquire 100% of the equity interests
in certain affiliates of Camino that own (i) certain oil and natural gas wells, leasehold interests and related assets and (ii)
certain undeveloped acreage, associated leasehold interests and related assets. The Purchase Agreement provided for a
purchase price of $1.175 billion, subject to customary post-closing purchase price adjustments. The transaction closed on
July 2, 2026.
On July 1, 2026, the Company completed an internal reorganization under common control to facilitate the transaction.
As part of the reorganization, ownership of certain subsidiaries was transferred to a newly formed holding company. The
reorganization did not change the underlying operations of the business presented in the accompanying financial
statements.
On July 2, 2026, the transaction contemplated by the Purchase Agreement was completed. In connection with the
closing, the Company repaid $420.0 million of outstanding borrowings under its existing revolving credit facility, which
was terminated. Certain commodity derivative contracts were novated to the purchaser pursuant to the Purchase
Agreement. The final purchase price remains subject to post-closing adjustments in accordance with the terms of the
Purchase Agreement. In connection with the closing of the transaction, approximately $630.8 million was distributed to
the equity holders, and approximately $50.3 million was distributed to the noncontrolling interest holders.
Subsequent to the closing of the transaction, the Company paid approximately $19.7 million related to cash-settled
performance units and transaction bonuses awarded to employees.
On July 2, 2026, in connection with the closing of the transaction, Camino entered into a new senior secured revolving
credit facility with JPMorgan Chase Bank, N.A., as administrative agent. The facility provides for aggregate maximum
credit amounts of $500.0 million, with an initial borrowing base and aggregate elected commitments of $110.0 million.
The facility matures on July 2, 2030, is secured by substantially all of the Company's oil and gas properties and certain
other assets, bears interest at variable rates based on SOFR or an alternate base rate plus an applicable margin and
contains customary financial and other covenants.
EX-99.3
EX-99.3
Filename: exhibit993-unauditedprofor.htm · Sequence: 5
Exhibit 99.3 - Unaudited pro forma financial information - Camino
1
Exhibit 99.3
Unaudited Pro Forma Condensed Combined Financial Information
Camino Natural Resources and Subsidiaries (“Camino”) Asset Acquisition
On July 2, 2026, Diversified Energy Company (the “Company” or “Diversified”) acquired equity interests of certain affiliates of
Camino Natural Resources, LLC (the “Camino Transaction”) that owned certain producing properties and undeveloped acreage for a
gross purchase price of approximately $1.2 billion before customary purchase price adjustments.
Simultaneously with the closing of the acquisition, the producing properties were contributed to an indirect subsidiary of a newly
formed special purpose vehicle (“SPV”), and the Company entered into an agreement with funds and accounts managed by Carlyle
Global Credit Investment Management, LLC (“Carlyle”) pursuant to which the Company and Carlyle hold 40% and 60% of the equity
interests in the SPV, respectively. Carlyle contributed $82 million and the Company contributed $55 million in exchange for their
respective equity interests in the SPV. The Company retained 100% ownership in the undeveloped acreage.
The acquisition of the producing properties was funded by $895 million of ABS notes issued by the SPV and collateralized by the
producing properties, together with the equity contributions of the Company and Carlyle described above. The Company’s acquisition
of the undeveloped acreage, for approximately $170 million, was funded by cash on hand and borrowings under the Company’s
revolving credit facility.
The Company does not control the activities that most significantly impact the economic performance of the SPV owning the Camino
assets, and therefore expects to account for the 40% interest in the SPV as an equity method investment.
Canvas Energy Inc. and Subsidiaries (“Canvas”) Asset Acquisition
On November 24, 2025, the Company acquired Canvas (the “Canvas Transaction”). When evaluating the transaction, the Company
determined that substantially all of the fair value of the gross assets acquired was concentrated in a single asset group; therefore, the
transaction was accounted for as an asset acquisition. The Company funded the transaction through a combination of the issuance of
3,718,209 new shares of common stock to former Canvas unitholders and cash consideration of approximately $399 million, inclusive
of transaction costs of approximately $13 million. In conjunction with the close of the Canvas Transaction, the Company closed on a
$400 million asset backed securitization (“ABS”) to partially fund the cash portion of the Transaction.
Maverick Natural Resources, LLC and Subsidiaries (“Maverick”) Business Combination
On March 14, 2025, the Company acquired Maverick (the “Maverick Transaction”). When evaluating the transaction, the Company
determined that the transaction did not have a significant concentration of assets and that it acquired an identifiable set of inputs,
processes, and outputs. As a result, the Company concluded the transaction was a business combination. The Company funded the
transaction through a combination of the issuance of 21,194,213 ordinary shares of the Company’s predecessor to Maverick
unitholders and cash consideration of approximately $211 million. Transaction costs incurred with the Maverick Transaction were
approximately $21 million.
Unaudited Pro Forma Condensed Combined Financial Statements
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 was prepared as if the Camino Transaction had
occurred on March 31, 2026. The Canvas Transaction closed on November 24, 2025 and the Maverick Transaction closed on March
14, 2025. Therefore, both the Canvas and Maverick transactions are already included in the Company's condensed consolidated
balance sheet as of March 31, 2026.
The unaudited pro forma condensed combined statements of comprehensive income (loss) for the three months ended March 31, 2026
and for the year ended December 31, 2025 were prepared as if the Camino, Canvas, and Maverick transactions had occurred on
January 1, 2025. The following unaudited pro forma condensed combined financial statements have been derived from the historical
consolidated financial statements of the Company, Camino, Canvas, and Maverick.
The unaudited pro forma condensed combined financial statements and underlying pro forma adjustments are based upon currently
available information and include certain estimates and assumptions made by the Company’s management; accordingly, actual results
could differ materially from the pro forma information. Management believes that the assumptions used to prepare the unaudited pro
forma condensed combined financial statements and accompanying notes provide a reasonable and supportable basis for presenting
the significant estimated effects of the transactions. The following unaudited pro forma condensed combined statements of
comprehensive income (loss) do not purport to represent what the Company’s results of operations would have been if the Camino,
Canvas, and Maverick transactions had occurred on January 1, 2025. The unaudited pro forma condensed combined balance sheet
does not purport to represent what the Company’s financial position would have been if the Camino Transaction had occurred on
March 31, 2026. The unaudited pro forma condensed combined financial statements should be read together with the following:
•the Company’s audited historical consolidated financial statements and accompanying notes included in its Annual Report on
Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, and the Company’s historical
2
Exhibit 99.3
financial statements included in its Quarterly Report on Form 10-Q for the three months ended March 31, 2026, filed with the
SEC on May 6, 2026;
•Camino’s audited and unaudited historical financial statements and accompanying notes thereto filed as Exhibit 99.1 and
Exhibit 99.2 to this report on Form 8-K/A of which this Exhibit 99.3 is a part; and
•Canvas’ unaudited historical consolidated financial statements and accompanying notes thereto filed as Exhibit 99.2 to the
report on Form 8-K/A filed with the SEC on February 6, 2026.
The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of SEC
Regulation S-X using assumptions set forth in the notes herein. Article 11 permits presentation of reasonably estimable synergies and
other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has
elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited
pro forma condensed combined financial statements.
3
Exhibit 99.3
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2026 (Unaudited)
(In thousands)
DEC Historical
(Note 1)
Camino As Adjusted
(Note 2)
Camino Transaction
Adjustments
(Note 3)
Pro Forma
Combined
ASSETS
Current assets:
Cash and cash equivalents
$54,539
$43,232
$(43,232)
(a)
$54,539
Restricted cash
17,303
—
—
17,303
Accounts receivable, net
411,674
92,791
(92,791)
(a)
411,674
Derivatives
76,946
9,808
(9,808)
(a)
76,946
Prepaid expenses and other current assets
66,947
1,557
(1,557)
(a)
66,947
Total current assets
627,409
147,388
(147,388)
627,409
Noncurrent assets:
Natural gas and oil properties (successful efforts method):
Proved natural gas and oil properties
5,850,455
2,928,657
(2,749,114)
(a)(b)
6,029,998
Unproved natural gas and oil properties
19,804
314,192
(301,497)
(a)(c)
32,499
Accumulated depletion
(1,412,289)
(1,028,183)
1,028,183
(a)
(1,412,289)
Natural gas and oil properties, net
4,457,970
2,214,666
(2,022,428)
4,650,208
Property, plant, and equipment, net
460,270
1,527
(1,527)
(a)
460,270
Restricted cash
83,660
—
—
83,660
Deferred tax assets
436,211
—
—
436,211
Investment in equity affiliate
—
—
54,873
(d)
54,873
Other assets
170,697
89,117
(89,117)
(a)
170,697
Total assets
6,236,217
2,452,698
(2,205,587)
6,483,328
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
76,427
46,014
(46,014)
(a)
76,427
Accrued liabilities
158,844
38,021
(38,021)
(a)
158,844
Revenue to be distributed
264,217
74,716
(74,716)
(a)
264,217
Current portion of long-term debt, net
235,255
—
—
235,255
Derivatives
336,738
36,388
(36,388)
(a)
336,738
Derivatives settlements payable
120,235
—
—
120,235
Other current liabilities
144,067
43,247
(20,769)
(a)(e)
166,545
Total current liabilities
1,335,783
238,386
(215,908)
1,358,261
Noncurrent liabilities:
Asset retirement obligations
870,043
11,305
(11,305)
(a)
870,043
Long-term debt, net
2,652,709
420,000
(195,367)
(a)(f)
2,877,342
Derivatives
540,743
5,411
(5,411)
(a)
540,743
Other liabilities
92,985
119,208
(119,208)
(a)
92,985
Total liabilities
5,492,263
794,310
(547,199)
5,739,374
Stockholders' equity:
Common stock
723
—
—
723
Additional paid in capital
1,426,156
—
—
1,426,156
Accumulated other comprehensive income (loss)
(583)
—
—
(583)
Retained earnings (accumulated deficit)
(692,932)
—
—
(692,932)
Total stockholders' equity attributable to DEC
733,364
1,550,283
(1,550,283)
(a)
733,364
Noncontrolling interest
10,590
108,105
(108,105)
(a)
10,590
Total stockholders' equity
743,954
1,658,388
(1,658,388)
743,954
Total liabilities and stockholders' equity
$6,236,217
$2,452,698
$(2,205,587)
$6,483,328
See accompanying notes to unaudited pro forma condensed combined financial information.
4
Exhibit 99.3
Unaudited Pro Forma Condensed Combined Statements of Comprehensive Income (Loss)
Three Months Ended March 31, 2026 (Unaudited)
(In thousands, except share and per share data)
DEC Historical
(Note 1)
Camino As
Adjusted
(Note 2)
Camino
Transaction
Adjustments
(Note 3)
Pro Forma
Combined
Revenue
Natural gas
$314,149
$77,313
$(77,313)
(a)
$314,149
NGLs
60,959
41,616
(41,616)
(a)
60,959
Oil
181,099
55,270
(55,270)
(a)
181,099
Total commodity revenue
556,207
174,199
(174,199)
556,207
Gain (loss) on derivatives
(548,383)
(109,156)
109,156
(a)
(548,383)
Midstream
11,764
—
—
11,764
Other
7,556
—
—
7,556
Total revenue
27,144
65,043
(65,043)
27,144
Operating expense
Lease operating expense
(132,968)
(17,029)
17,029
(a)
(132,968)
Production taxes
(30,491)
(8,015)
8,015
(a)
(30,491)
Midstream operating expense
(20,236)
—
—
(20,236)
Transportation expense
(28,568)
(32,914)
32,914
(a)
(28,568)
Accretion of asset retirement obligation
(13,248)
—
—
(13,248)
General and administrative expense
(41,708)
(3,354)
3,354
(a)
(41,708)
Depreciation, depletion and amortization
(108,565)
(43,478)
41,230
(a)(b)
(110,813)
Gain (loss) on natural gas and oil properties and equipment
98,077
(180)
180
(a)
98,077
Total operating expense
(277,707)
(104,970)
102,722
(279,955)
Income (loss) from operations
(250,563)
(39,927)
37,679
(252,811)
Other income (expense)
Income (loss) from equity affiliates
—
—
(18,625)
(c)
(18,625)
Interest expense
(63,412)
(8,465)
4,637
(a)(d)
(67,240)
Other income (expense)
548
1,830
(1,830)
(a)
548
Income (loss) before taxation
(313,427)
(46,562)
21,861
(338,128)
Income tax benefit (expense)
152,762
—
4,470
(e)
157,232
Net income (loss)
(160,665)
(46,562)
26,331
(180,896)
Other comprehensive income (loss)
—
—
—
—
Total comprehensive income (loss)
(160,665)
(46,562)
26,331
(180,896)
Net income (loss) attributable to:
DEC
(160,617)
(42,882)
26,331
(177,168)
Noncontrolling interest
(48)
(3,680)
—
(3,728)
Net income (loss)
$(160,665)
$(46,562)
$26,331
$(180,896)
Earnings (loss) per share attributable to DEC
Basic
$(2.13)
$—
$—
$(2.35)
Diluted
$(2.13)
$—
$—
$(2.35)
Weighted average shares outstanding
Basic
75,255,211
—
—
75,255,211
Diluted
75,255,211
—
—
75,255,211
See accompanying notes to unaudited pro forma condensed combined financial information.
5
Exhibit 99.3
Unaudited Pro Forma Condensed Combined Statements of Comprehensive Income (Loss)
Year Ended December 31, 2025 (Unaudited)
(In thousands, except share and per
share data)
DEC
Historical
(Note 1)
Maverick
As
Adjusted
(Note 2)
Canvas
As
Adjusted
(Note 2)
Camino
As
Adjusted
(Note 2)
Maverick
Transaction
Adjustments
(Note 5)(a)
Canvas
Transaction
Adjustments
(Note 4)(a)
Camino
Transaction
Adjustments
(Note 3)
Pro
Forma
Combined
Revenue
Natural gas
$830,247
$41,668
$62,722
$247,978
$—
$—
$(247,978)
(a)
$934,637
NGLs
207,868
18,724
54,628
183,929
—
—
(183,929)
(a)
281,220
Oil
500,706
93,665
155,313
233,308
—
—
(233,308)
(a)
749,684
Total commodity revenue
1,538,821
154,057
272,663
665,215
—
—
(665,215)
1,965,541
Gain (loss) on derivatives
217,687
(11,544)
6,815
112,825
—
—
(112,825)
(a)
212,958
Midstream
40,492
—
—
—
—
—
—
40,492
Other
32,142
12,077
—
—
—
—
—
44,219
Total revenue
1,829,142
154,590
279,478
778,040
—
—
(778,040)
2,263,210
Operating expense
Lease operating expense
(457,593)
(77,620)
(41,626)
(48,908)
—
—
48,908
(a)
(576,839)
Production taxes
(86,709)
—
(14,225)
(30,818)
—
—
30,818
(a)
(100,934)
Midstream operating expense
(79,185)
—
—
—
—
—
—
(79,185)
Transportation expense
(115,267)
—
(25,926)
(133,551)
—
—
133,551
(a)
(141,193)
Accretion of asset retirement
obligation
(48,607)
(2,076)
(1,071)
—
(1,309)
(b)
33
(b)
—
(53,030)
General and administrative expense
(167,626)
(28,311)
(20,211)
(24,908)
—
—
24,908
(a)
(216,148)
Depreciation, depletion and
amortization
(412,506)
(22,332)
(68,302)
(198,721)
544
(c)
11,352
(c)
191,001
(b)
(498,964)
Gain (loss) on natural gas and oil
properties and equipment
73,368
7,152
118
(3,405)
—
—
3,405
(a)
80,638
Total operating expense
(1,294,125)
(123,187)
(171,243)
(440,311)
(765)
11,385
432,591
(1,585,655)
Income (loss) from operations
535,017
31,403
108,235
337,729
(765)
11,385
(345,449)
677,555
Other income (expense)
Income (loss) from equity affiliates
—
—
—
—
—
—
143,277
(c)
143,277
Interest expense
(209,967)
(14,833)
(6,515)
(30,387)
(4,238)
(d)
(30,932)
(d)
11,321
(a)(d)
(285,551)
Loss on debt extinguishment
(26,971)
—
—
—
—
—
—
(26,971)
Other income (expense)
3,270
417
1,073
73,696
—
—
(73,696)
(a)
4,760
Income (loss) before taxation
301,349
16,987
102,793
381,038
(5,003)
(19,547)
(264,547)
513,070
Income tax benefit (expense)
40,550
59
(21,488)
—
1,201
(e)
4,691
(e)
(34,387)
(e)
(9,374)
Net income (loss)
341,899
17,046
81,305
381,038
(3,802)
(14,856)
(298,934)
503,696
Other comprehensive income (loss)
352
—
—
—
—
—
—
352
Total comprehensive income (loss)
342,251
17,046
81,305
381,038
(3,802)
(14,856)
(298,934)
504,048
Net income (loss) attributable to:
DEC
341,115
17,046
81,305
358,193
(3,802)
(14,856)
(298,934)
480,067
Noncontrolling interest
784
—
—
22,845
—
—
—
23,629
Net income (loss)
$341,899
$17,046
$81,305
$381,038
$(3,802)
$(14,856)
$(298,934)
$503,696
Earnings (loss) per share attributable to DEC
Basic
$4.67
$—
$—
$—
$—
$—
$—
$4.90
(f)
Diluted
$4.58
$—
$—
$—
$—
$—
$—
$4.83
(f)
Weighted average shares outstanding
Basic
72,969,687
—
—
—
21,194,213
(f)
3,718,209
(f)
—
97,882,109
(f)
Diluted
74,478,592
—
—
—
21,194,213
(f)
3,718,209
(f)
—
99,391,014
(f)
See accompanying notes to unaudited pro forma condensed combined financial information.
6
Exhibit 99.3
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1 - Basis for Pro Forma Presentation
The accompanying unaudited pro forma condensed combined financial information was prepared based on:
•The historical consolidated financial statements of the Company for the year ended December 31, 2025 and the three months
ended March 31, 2026,
•The historical Camino consolidated financial statements for the year ended December 31, 2025 and the three months ended March
31, 2026,
•The historical Canvas consolidated financial statements for the nine months ended September 30, 2025 and the financial activity
from October 1, 2025 through November 24, 2025, the closing date of the Canvas Transaction,
•The historical Maverick financial activity from January 1, 2025 through March 14, 2025, the closing date of the Maverick
Transaction.
The unaudited pro forma condensed combined statement of comprehensive income (loss) for the three months ended March 31, 2026
and the year ended December 31, 2025 were prepared assuming the Camino, Canvas, and Maverick transactions occurred on January
1, 2025. The unaudited pro forma condensed combined balance sheet as of March 31, 2026 was prepared as if the Camino Transaction
had occurred on March 31, 2026. The Canvas Transaction closed on November 24, 2025 and the Maverick Transaction closed on
March 14, 2025. Therefore, both the Canvas and Maverick transactions are already included in the Company's condensed consolidated
balance sheet as of March 31, 2026.
The unaudited pro forma condensed combined financial information reflects pro forma adjustments that are described in the
accompanying notes and are based on currently available information and certain assumptions that the Company believes are
reasonable, however, actual results may differ materially. In the Company’s opinion, all adjustments that are necessary to present
fairly the pro forma information have been made. The unaudited pro forma condensed combined financial information does not
purport to represent what the Company’s results of operations would have been if the Camino, Canvas, and Maverick transactions had
actually occurred on the dates indicated above, nor is it indicative of the Company’s future results of operations. The unaudited pro
forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements
and related notes of the Company, as applicable, for the periods presented.
Note 2 - Reclassification Adjustments
Certain reclassifications have been made in the historical presentation of Camino, Canvas, and Maverick’s financial statements to
conform to the Company’s historical presentation.
Camino Transaction
Condensed Consolidated Balance Sheet as of March 31, 2026
(In thousands)
Camino Caption
Diversified Caption
Camino
Historical
Reclassification
Adjustments
Camino As
Adjusted
ASSETS
Current assets:
Cash and cash equivalents
Cash and cash equivalents
$43,232
$—
$43,232
Restricted cash
—
—
—
Accounts receivable, net of allowance for
doubtful accounts of $637 and $696,
respectively
Accounts receivable, net
92,791
—
92,791
Derivative instruments
Derivatives
9,808
—
9,808
Prepaid and other current assets
Prepaid expenses and other current assets
1,557
—
1,557
Total current assets
147,388
—
147,388
7
Exhibit 99.3
Camino Caption
Diversified Caption
Camino
Historical
Reclassification
Adjustments
Camino As
Adjusted
Noncurrent assets:
Natural gas and oil properties (successful efforts
method):
Proved oil and natural gas properties,
successful efforts method
Proved natural gas and oil properties
2,928,657
—
2,928,657
Unproved oil and natural gas properties
Unproved natural gas and oil properties
314,192
—
314,192
Accumulated depreciation, depletion, and
amortization
Accumulated depletion
(1,028,183)
—
(1,028,183)
Natural gas and oil properties, net
2,214,666
—
2,214,666
Other property and equipment, net of
accumulated depreciation of $5,374 and
$5,016, respectively
Property, plant, and equipment, net
1,527
—
1,527
Operating leases right-of-use assets
26,057
(26,057)
(1)
—
Restricted cash
—
—
—
Derivative instruments
Derivatives
3,294
(3,294)
(2)
—
Deferred tax assets
—
—
—
Investment in unconsolidated subsidiary
51,606
(51,606)
(3)
—
Other non-current assets
Other assets
8,160
80,957
(1)(2)(3)
89,117
Total assets
2,452,698
—
2,452,698
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
Accounts payable
46,014
—
46,014
Accrued expenses
Accrued liabilities
38,021
—
38,021
Revenue and royalties payable
Revenue to be distributed
74,716
—
74,716
Lease liabilities
22,217
(22,217)
(5)
—
Derivative instruments
Derivatives
36,388
—
36,388
Derivatives settlements payable
—
—
—
Other liabilities
Other current liabilities
10,780
32,467
(4)(5)
43,247
Deferred drilling incentive
10,250
(10,250)
(4)
—
Total current liabilities
238,386
—
238,386
Noncurrent liabilities:
Asset retirement obligations
Asset retirement obligations
11,305
—
11,305
Lease liabilities
3,421
(3,421)
(5)
—
Revolving credit facility
Long-term debt, net
420,000
—
420,000
Derivative instruments
Derivatives
5,411
—
5,411
Other liabilities
Other liabilities
570
118,638
(5)(6)
119,208
Deferred drilling incentive
115,217
(115,217)
(6)
—
Total liabilities
794,310
—
794,310
Stockholders' equity:
Common stock
—
—
—
Additional paid in capital
—
—
—
Accumulated other comprehensive income (loss)
—
—
—
Retained earnings (accumulated deficit)
—
—
—
Members' equity
Total stockholders' equity attributable to DEC
1,550,283
—
1,550,283
Non-controlling interest
Non-controlling interest
108,105
—
108,105
Total stockholders' equity
1,658,388
$—
1,658,388
Total liabilities and stockholders' equity
$2,452,698
$—
$2,452,698
(1)Represents the reclassification of amounts contained in “Operating leases right-of-use assets” on Camino’s historical
balance sheet to “Other assets” within “Total assets” to conform to the Company’s balance sheet presentation.
(2)Represents the reclassification of amounts contained in “Derivative instruments” on Camino’s historical balance sheet to
“Other assets” within “Total assets” to conform to the Company’s balance sheet presentation.
(3)Represents the reclassification of amounts contained in “Investment in unconsolidated subsidiary” on Camino’s historical
balance sheet to “Other assets” within “Total assets” to conform to the Company’s balance sheet presentation.
8
Exhibit 99.3
(4)Represents the reclassification of amounts contained in “Deferred drilling incentive” on Camino’s historical balance sheet
to “Other current liabilities” within “Total liabilities” to conform to the Company’s balance sheet presentation.
(5)Represents the reclassification of amounts contained in “Lease liabilities” on Camino’s historical balance sheet to “Other
liabilities” within “Total liabilities” to conform to the Company’s balance sheet presentation.
(6)Represents the reclassification of amounts contained in “Deferred drilling incentive” on Camino’s historical balance sheet
to “Other liabilities” within “Total liabilities” to conform to the Company’s balance sheet presentation.
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026
(In thousands)
Camino Caption
Diversified Caption
Camino
Historical
Reclassification
Adjustments
Camino As
Adjusted
Revenue
Natural gas revenues
Natural gas
$9,786
$67,527
(1)
$77,313
Natural gas revenues with affiliate
67,527
(67,527)
(1)
—
Natural gas liquid revenues
NGLs
4,653
36,963
(2)
41,616
Natural gas liquid revenues with affiliate
36,963
(36,963)
(2)
—
Oil revenues
Oil
54,789
481
(3)
55,270
Oil revenues with affiliate
481
(481)
(3)
—
Total commodity revenue
174,199
—
174,199
Gain (loss) on derivatives
—
109,156
(4)(9)
(109,156)
Midstream
—
—
—
Other
—
—
—
Total revenue
174,199
(109,156)
(4)
65,043
Operating expense
Lease operating expenses
Lease operating expense
16,898
131
(5)(9)
(17,029)
Leasehold expirations
131
(131)
(5)
—
Production taxes
Production taxes
8,015
—
(9)
(8,015)
Midstream operating expense
—
—
—
Transportation, processing, gathering and other
operating expense
Transportation expense
2,671
30,243
(6)(9)
(32,914)
Transportation, processing, gathering and other
operating expense with affiliate
30,243
(30,243)
(6)
—
Accretion of asset retirement obligation
—
—
—
General and administrative expenses
General and administrative expense
3,354
—
(9)
(3,354)
—
—
—
Depreciation, depletion, amortization and
accretion of asset retirement obligations
Depreciation, depletion and amortization
43,478
—
(9)
(43,478)
Gain (loss) on natural gas and oil property and
equipment
—
(180)
(7)
(180)
Total operating expense
104,790
180
(104,970)
Income (loss) from operations
69,409
(109,336)
(39,927)
9
Exhibit 99.3
Camino Caption
Diversified Caption
Camino
Historical
Reclassification
Adjustments
Camino As
Adjusted
Other expense (income)
Other income (expense)
Loss on sale of oil and natural gas properties
(180)
180
(7)
—
Interest expense
Interest expense
8,465
—
(9)
(8,465)
Loss of debt extinguishment
—
—
—
Other income
Other income (expense)
(850)
(980)
(8)(10)
1,830
Income from equity investments
(980)
980
(8)
—
Net loss on derivative instruments
109,156
(109,156)
(4)
—
Income (loss) before taxation
(46,562)
—
(46,562)
Income tax benefit (expense)
—
—
—
Net income (loss)
(46,562)
—
(46,562)
Other comprehensive income (loss)
—
—
—
Total comprehensive income (loss)
(46,562)
$—
(46,562)
Net income (loss) attributable to:
Net income (loss) attributable to Camino Natural
Resources Holdings, LLC
DEC
(42,882)
$—
(42,882)
Net income (loss) attributable to non-controlling
interest
Non-controlling interest
(3,680)
—
(3,680)
Net income (loss)
$(46,562)
$—
$(46,562)
(1)Represents the reclassification of amounts contained in “Natural gas revenues with affiliate” on Camino’s historical income
statement to “Natural gas” within “Total commodity revenue” to conform to the Company’s income statement presentation.
(2)Represents the reclassification of amounts contained in “Natural gas liquid revenues with affiliate” on Camino’s historical
income statement to “NGLs” within “Total commodity revenue” to conform to the Company’s income statement
presentation.
(3)Represents the reclassification of amounts contained in “Oil revenues with affiliate” on Camino’s historical income
statement to “Oil” within “Total commodity revenue” to conform to the Company’s income statement presentation.
(4)Represents the reclassification of amounts contained in “Net loss on derivative instruments” on Camino’s historical income
statement to “Gain (loss) on derivatives” to conform to the Company’s income statement presentation.
(5)Represents the reclassification of amounts contained in “Leasehold expirations” on Camino’s historical income statement to
“Lease operating expense” to conform to the Company’s income statement presentation.
(6)Represents the reclassification of amounts contained in “Transportation, processing, gathering and other operating expense
with affiliates” on Camino’s historical income statement to “Transportation expense” to conform to the Company’s income
statement presentation.
(7)Represents the reclassification of amounts contained in “Loss on sale of oil and natural gas properties” on Camino’s
historical income statement to “Gain (loss) on natural gas and oil properties and equipment” to conform to the Company’s
income statement presentation.
(8)Represents the reclassification of amounts contained in “Income from equity investments” on Camino’s historical income
statement to “Other income (expense)” to conform to the Company’s income statement presentation.
(9)Represents the presentation on Camino’s historical income statement as a negative value to conform to the Company’s
income statement presentation.
(10) Represents the presentation on Camino’s historical income statement as a positive value to conform to the Company’s
income statement presentation.
10
Exhibit 99.3
Condensed Consolidated Statement of Comprehensive Income (Loss) for the Twelve Months Ended December 31, 2025
(In thousands)
Camino Caption
Diversified Caption
Camino
Historical
Reclassification
Adjustments
Camino As
Adjusted
Revenue
Natural gas revenues
Natural gas
$33,646
$214,332
(1)
$247,978
Natural gas revenues with affiliate
214,332
(214,332)
(1)
—
Natural gas liquid revenues
NGLs
23,153
160,776
(2)
183,929
Natural gas liquid revenues with affiliate
160,776
(160,776)
(2)
—
Oil revenues
Oil
230,881
2,427
(3)
233,308
Oil revenues with affiliate
2,427
(2,427)
(3)
—
Total commodity revenue
665,215
—
665,215
Gain (loss) on derivatives
—
112,825
(4)
112,825
Midstream
—
—
—
Other
—
—
—
Total revenue
665,215
112,825
778,040
Operating expense
Lease operating expenses
Lease operating expense
48,908
—
(10)
(48,908)
Production taxes
Production taxes
30,818
—
(10)
(30,818)
Midstream operating expense
—
—
—
Transportation, processing, gathering and other
operating expense
Transportation expense
14,539
119,012
(5)(10)
(133,551)
Transportation, processing, gathering and other
operating expense with affiliate
119,012
(119,012)
(5)
—
Accretion of asset retirement obligation
—
—
—
General and administrative expenses
General and administrative expense
24,908
—
(10)
(24,908)
—
—
Depreciation, depletion, amortization and
accretion of asset retirement obligations
Depreciation, depletion and amortization
198,323
398
(6)(10)
(198,721)
Exploration and impairment of unproved
properties
398
(398)
(6)
—
Gain (loss) on natural gas and oil property and
equipment
—
3,405
(7)(10)
(3,405)
Total operating expense
436,906
3,405
(440,311)
Income (loss) from operations
228,309
109,420
337,729
Other expense (income)
Other income (expense)
Loss on sale of oil and natural gas properties
3,405
(3,405)
(7)
—
Gain on disposition of equity method
investment
(61,425)
61,425
(8)
—
Interest expense
Interest expense
30,387
—
(10)
(30,387)
Loss of debt extinguishment
—
—
—
Other income
Other income (expense)
(2,783)
(70,913)
(8)(9)(11)
73,696
Income from equity investments
(9,488)
9,488
(9)
—
Net (gain) loss on derivative instruments
(112,825)
112,825
(4)
—
Income (loss) before taxation
381,038
—
381,038
Income tax benefit (expense)
—
—
—
Net income (loss)
381,038
—
381,038
Other comprehensive income (loss)
—
—
—
Total comprehensive income (loss)
381,038
—
381,038
Net income (loss) attributable to:
Net income attributable to Camino Natural
Resources Holdings, LLC
DEC
358,193
—
358,193
Net income attributable to non-controlling
interest
Non-controlling interest
22,845
—
22,845
Net income (loss)
$381,038
$—
$381,038
(1)Represents the reclassification of amounts contained in “Natural gas revenues with affiliate” on Camino’s historical income
statement to “Natural gas” within “Total commodity revenue” to conform to the Company’s income statement presentation.
11
Exhibit 99.3
(2)Represents the reclassification of amounts contained in “Natural gas liquid revenues with affiliate” on Camino’s historical
income statement to “NGLs” within “Total commodity revenue” to conform to the Company’s income statement
presentation.
(3)Represents the reclassification of amounts contained in “Oil revenues with affiliate” on Camino’s historical income
statement to “Oil” within “Total commodity revenue” to conform to the Company’s income statement presentation.
(4)Represents the reclassification of amounts contained in “Net (gain) loss on derivative instruments” on Camino’s historical
income statement to “Gain (loss) on derivatives” to conform to the Company’s income statement presentation.
(5)Represents the reclassification of amounts contained in “Transportation, processing, gathering and other operating expense
with affiliate” on Camino’s historical income statement to “Transportation expense” to conform to the Company’s income
statement presentation.
(6)Represents the reclassification of amounts contained in “Exploration and impairment of unproved properties” on Camino’s
historical income statement to “Depreciation, depletion and amortization” to conform to the Company’s income statement
presentation.
(7)Represents the reclassification of amounts contained in “Loss on sale of oil and natural gas properties” on Camino’s
historical income statement to “Gain (loss) on natural gas and oil properties and equipment” to conform to the Company’s
income statement presentation.
(8)Represents the reclassification of amounts contained in “Gain on disposition of equity investment” on Camino’s historical
income statement to “Other income (expense)” to conform to the Company’s income statement presentation.
(9)Represents the reclassification of amounts contained in “Income from equity investments” on Camino’s historical income
statement to “Other income (expense)” to conform to the Company’s income statement presentation.
(10) Represents the presentation on Camino’s historical income statement as a negative value to conform to the Company’s
income statement presentation.
(11) Represents the presentation on Camino’s historical income statement as a positive value to conform to the Company’s
income statement presentation.
Canvas Transaction
Condensed Consolidated Statement of Comprehensive Income for the Period of October 1, 2025 to November 24, 2025
(in thousands)
Canvas Caption
Diversified Caption
Canvas Historical
Reclassification
Adjustments
Canvas As
Adjusted
Revenue
Natural gas
$—
$9,491
(1)
$9,491
NGLs
—
7,743
(1)
7,743
Oil
—
19,110
(1)
19,110
Commodity sales
Total commodity revenue
32,506
3,838
(1)
36,344
Derivatives gains (losses), net
Gain (loss) on derivatives
—
2,066
(2)
2,066
Midstream
—
—
—
Other
—
—
—
Total revenue
32,506
5,904
(1)(2)
38,410
Operating expense
Lease operating
Lease operating expense
6,814
—
(4)
(6,814)
Production taxes
Production taxes
1,861
—
(4)
(1,861)
Midstream operating expense
—
—
—
Transportation and processing
Transportation expense
613
3,838
(1)(4)
(4,451)
Accretion of asset retirement obligation
—
276
(3)(4)
(276)
General and administrative
General and administrative expense
4,392
—
(4)
(4,392)
Depletion, depreciation and amortization
Depreciation, depletion and amortization
11,795
(276)
(3)(4)
(11,519)
(Gain) loss on sale of assets
Gain (loss) on natural gas and oil
properties and equipment
—
—
Total operating expense
25,475
3,838
(1)
(29,313)
Income (loss) from operations
7,031
2,066
(2)
9,097
12
Exhibit 99.3
Canvas Caption
Diversified Caption
Canvas Historical
Reclassification
Adjustments
Canvas As
Adjusted
Other income (expense)
Interest expense
Interest expense
(675)
—
(675)
Derivatives gains (losses), net
2,066
(2,066)
(2)
—
(Gain) loss on sale of assets
—
—
—
Loss of debt extinguishment
—
—
—
Other income, net
Other income (expense)
(152)
—
(152)
Income (loss) before taxation
8,270
—
8,270
Income tax expense (benefit) - current
Income tax benefit (expense)
—
—
—
Income tax expense (benefit) - deferred
—
—
—
Net income (loss)
8,270
—
8,270
Other comprehensive income (loss)
—
—
—
Total comprehensive income (loss)
$8,270
$—
$8,270
(1)Represents the breakout of “Commodity sales” on Canvas’ historical income statement to “Natural gas”, “NGLs”, and
“Oil” revenues to conform to the Company’s income statement presentation, as well as the reclassification of
“Transportation and processing” on Canvas’ historical income statement as a revenue deduction to “Transportation
expense” to conform to the Company’s income statement presentation.
(2)Represents the reclassification of “Derivatives gains (losses), net” to “Gain (loss) on derivatives” within “Total revenue” to
conform to the Company’s income statement presentation.
(3)Represents the reclassification of accretion amounts contained in “Depreciation, depletion, accretion, and amortization” to
“Accretion of asset retirement obligation” to conform to the Company’s income statement presentation.
(4)Represents the presentation on Canvas' historical income statement as a negative value to conform to the Company’s income
statement presentation.
13
Exhibit 99.3
Condensed Consolidated Statement of Comprehensive Income (Loss) for the Nine Months Ended September 30, 2025
(In thousands)
Canvas Caption
Diversified Caption
Canvas Historical
Reclassification
Adjustments
Canvas As
Adjusted
Revenue
Natural gas
$—
$53,231
(1)
$53,231
NGLs
—
46,885
(1)
46,885
Oil
—
136,203
(1)
136,203
Commodity sales
Total commodity revenue
221,110
15,209
(1)
236,319
Derivatives gains (losses), net
Gain (loss) on derivatives
—
4,749
(2)
4,749
Midstream
—
—
—
Other
—
—
—
Total revenue
221,110
19,958
(1)(2)
241,068
Operating expense
Lease operating
Lease operating expense
34,812
—
(6)
(34,812)
Production taxes
Production taxes
12,364
—
(6)
(12,364)
Midstream operating expense
—
—
—
Transportation and processing
Transportation expense
6,266
15,209
(1)(6)
(21,475)
Accretion of asset retirement obligation
—
795
(3)(6)
(795)
General and administrative
General and administrative expense
15,819
—
(6)
(15,819)
Depletion, depreciation and amortization
Depreciation, depletion and amortization
57,578
(795)
(3)(6)
(56,783)
Gain on sale of assets
Gain (loss) on natural gas and oil
properties and equipment
—
118
(4)
118
Total operating expense
126,839
15,091
(1)(4)
(141,930)
Income (loss) from operations
94,271
4,867
(2)(4)
99,138
Other income (expense)
Interest expense
Interest expense
(5,840)
—
(5,840)
Derivatives gains (losses), net
4,749
(4,749)
(2)
—
Gain on sale of assets
118
(118)
(4)
—
Loss on debt extinguishment
—
—
—
Other income, net
Other income (expense)
1,225
—
1,225
Income (loss) before taxation
94,523
—
94,523
Income tax expense (benefit) - current
Income tax benefit (expense)
545
20,943
(5)(6)
(21,488)
Income tax expense (benefit) - deferred
20,943
(20,943)
(5)
—
Net income (loss)
73,035
—
73,035
Other comprehensive income (loss)
—
—
—
Total comprehensive income (loss)
$73,035
$—
$73,035
(1)Represents the breakout of “Commodity sales” on Canvas’ historical income statement to “Natural gas”, “NGLs”, and
“Oil” revenues to conform to the Company’s income statement presentation, as well as the reclassification of
“Transportation and processing” on Canvas’ historical income statement as a revenue deduction to “Transportation
expense” to conform to the Company’s income statement presentation.
(2)Represents the reclassification of “Derivatives gains (losses), net” to “Gain (loss) on derivatives” within “Total revenue” to
conform to the Company’s income statement presentation.
(3)Represents the reclassification of accretion amounts contained in “Depreciation, depletion, accretion, and amortization” to
“Accretion of asset retirement obligation” to conform to the Company’s income statement presentation.
(4)Represents the reclassification of amounts contained in “Gain (loss) on sale of assets” on Canvas' historical income
statement to “Gain (loss) on natural gas and oil properties and equipment” within “Total operating expense” to conform to
the Company’s income statement presentation.
(5)Represents the reclassification of amounts contained in “Income tax expense (benefit) - current” and “Income tax expense
(benefit) - deferred” to “Income tax benefit (expense)” to conform to the Company’s income statement presentation.
14
Exhibit 99.3
(6)Represents the presentation on Canvas' historical income statement as a negative value to conform to the Company’s income
statement presentation.
Maverick Transaction
Condensed Consolidated Statement of Comprehensive Income (Loss) for the Period of January 1, 2025 to March 14, 2025
(In thousands)
Maverick Caption
Diversified Caption
Maverick
Historical
Reclassification
Adjustments
Maverick As
Adjusted
Revenue
Natural gas revenues
Natural gas
$41,668
$—
$41,668
NGL revenues
NGLs
18,724
—
18,724
Oil revenues
Oil
93,665
—
93,665
Total commodity revenue
154,057
—
154,057
Realized gain (loss) on commodity derivative
instruments
Gain (loss) on derivatives
(5,376)
(6,168)
(1)
(11,544)
Unrealized gain (loss) on commodity derivative
instruments
(6,168)
6,168
(1)
—
Midstream
—
—
—
Other revenues, net
Other
12,077
—
12,077
Total revenue
154,590
—
154,590
Operating expense
Operating costs
Lease operating expense
77,620
—
(4)
(77,620)
Production taxes
—
—
—
Midstream operating expense
—
—
—
Transportation expense
—
—
—
Accretion of asset retirement obligation
—
2,076
(4)
(2,076)
General and administrative expenses
General and administrative expense
23,113
5,198
(2)(4)
(28,311)
Restructuring costs
5,198
(5,198)
(2)
—
Depletion, depreciation and amortization
Depreciation, depletion and amortization
24,408
(2,076)
(3)(4)
(22,332)
(Gain) loss on sale of assets
Gain (loss) on natural gas and oil property and
equipment
(7,152)
—
(5)
7,152
Total operating expense
123,187
—
(123,187)
Income (loss) from operations
31,403
—
31,403
Other income (expense)
Interest expense
Interest expense
14,833
—
(4)
(14,833)
Loss of debt extinguishment
—
—
—
Other income, net
Other income (expense)
(417)
—
(5)
417
Income (loss) before taxation
16,987
—
16,987
Income tax expense (benefit)
Income tax benefit (expense)
(59)
—
(5)
59
Net income (loss)
17,046
—
17,046
Other comprehensive income (loss)
—
—
—
Total comprehensive income (loss)
$17,046
$—
$17,046
(1)Represents the reclassification of amounts contained in “Realized gain (loss) on commodity derivative instruments” and
“Unrealized gain (loss) on commodity derivative instruments” on Maverick’s historical income statement to “Gain (loss) on
derivatives” to conform to the Company’s income statement presentation.
(2)Represents the reclassification of amounts contained in “General and administrative expenses” and “Restructuring costs”
on Maverick’s historical income statement to “General and administrative expense” to conform to the Company’s income
statement presentation.
(3)Represents the reclassification of amounts contained in “Depletion, depreciation and amortization” on Maverick’s historical
income statement to “Accretion of asset retirement obligation” to conform to the Company’s income statement presentation.
(4)Represents the presentation on Maverick’s historical income statement as a negative value to conform to the Company’s
income statement presentation.
(5)Represents the presentation on Maverick’s historical income statement as a positive value to conform to the Company’s
income statement presentation.
15
Exhibit 99.3
Note 3 - Pro Forma Adjustments - Camino Transaction
Condensed Consolidated Balance Sheet
The table below represents the preliminary value of the total consideration of the Camino Transaction.
(In thousands)
Preliminary Purchase
Price Consideration
Diversified cash consideration to Camino through draw on revolving credit facility for a 40% interest
in newly formed SPV
$54,873
PLUS: Diversified cash consideration to Camino for undeveloped properties through draw on
revolving credit facility
169,760
Preliminary purchase price consideration
$224,633
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 reflects the following adjustments for the Camino
Transaction:
(a)Represents the adjustment to remove the historical Camino balances, as these balances were either not acquired or are not
expected to be consolidated in the Company’s consolidated balance sheet, given the Camino Transaction is expected to be
accounted for as an equity method investment.
(b)Represents the adjustment for the acquisition of proved undeveloped properties, which were acquired 100% by the Company
in the Camino Transaction.
(c)Represents the adjustment for the acquisition of unproved properties, which were acquired 100% by the Company in the
Camino Transaction.
(d)Represents the adjustment to reflect the value of the Company’s equity contribution to acquire a 40% interest in the SPV that
owns the Camino producing assets.
(e)Represents the adjustment for the Company’s assumption of certain suspense liabilities associated with the producing wells in
the SPV that owns the Camino producing assets.
(f)Represents the adjustment for additional borrowings on the Company’s credit facility to finance the purchase of the
undeveloped properties and equity ownership in the SPV owning the Camino producing assets.
Condensed Consolidated Statement of Comprehensive Income (Loss)
The unaudited pro forma condensed combined statement of comprehensive income (loss) for the three months ended March 31, 2026
reflects the adjustments listed below for the Camino Transaction. These adjustments are expected to have a continuing impact on the
combined Company, unless stated otherwise.
(a)Represents the adjustment to remove the historical Camino balances, as these balances were either not acquired or are not
expected to be consolidated in the Company’s consolidated statements of comprehensive income (loss), given the Camino
Transaction is expected to be accounted for as an equity method investment.
(b)Represents the adjustment for depreciation, depletion and amortization expense related to the proved undeveloped properties
acquired in the Camino Transaction. Depletion was calculated using the unit-of-production method under the successful
efforts method of accounting. The depletion expense was adjusted for the revision to the depletion rate reflecting the
acquisition costs and the reserves volumes attributable to the acquired proved undeveloped properties. The pro forma
depletion rate attributable to the Camino Transaction was $6.30 per barrel of oil equivalent.
(c)Represents the adjustment to reflect the income (loss) from the Company’s 40% ownership in the SPV that owns the Camino
producing assets as an equity method investment.
(d)Represents the increase to interest expense resulting from the incremental interest expense for borrowings on the Company’s
credit facility to finance the purchase of the undeveloped properties and equity ownership in the SPV owning the Camino
producing assets.
(e)Represents the estimated income tax impact of the income (loss) from equity affiliates pro forma adjustment from the Camino
Transaction at the estimated blended federal and state statutory rate of approximately 24% for the three months ended March
31, 2026. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate,
the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Camino
Transaction.
16
Exhibit 99.3
The unaudited pro forma condensed combined statement of comprehensive income (loss) for the year ended December 31, 2025
reflects the adjustments listed below for the Camino Transaction. These adjustments are expected to have a continuing impact on the
combined Company, unless stated otherwise.
(a)Represents the adjustment to remove the historical Camino balances, as these balances were either not acquired or are not
expected to be consolidated in the Company’s consolidated statements of comprehensive income (loss), given the Camino
Transaction is expected to be accounted for as an equity method investment.
(b)Represents the adjustment for depreciation, depletion and amortization expense related to the proved undeveloped properties
acquired in the Camino Transaction. Depletion was calculated using the unit-of-production method under the successful
efforts method of accounting. The depletion expense was adjusted for the revision to the depletion rate reflecting the
acquisition costs and the reserves volumes attributable to the acquired proved undeveloped properties. The pro forma
depletion rate attributable to the Camino Transaction was $6.30 per barrel of oil equivalent.
(c)Represents the adjustment to reflect the income from the Company’s 40% ownership in the SPV that owns the Camino
producing assets as an equity method investment.
(d)Represents the increase to interest expense resulting from the incremental interest expense for borrowings on the Company’s
credit facility to finance the purchase of the undeveloped properties and equity ownership in the SPV owning the Camino
producing assets.
(e)Represents the estimated income tax impact of the income (loss) from equity affiliates pro forma adjustment from the Camino
Transaction at the estimated blended federal and state statutory rate of approximately 24% for the year ended December 31,
2025. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the
blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Camino Transaction.
Note 4 - Pro Forma Adjustments - Canvas Transaction
The unaudited pro forma condensed combined statement of comprehensive income (loss) for the year ended December 31, 2025
reflects the adjustments listed below for the Canvas Transaction. These adjustments are expected to have a continuing impact on the
combined Company, unless stated otherwise.
(a)Adjustments are for the period January 1, 2025 through November 24, 2025, the date the Canvas Transaction closed.
(b)Represents a decrease in accretion expense attributable to asset retirement obligations for the year ended December 31, 2025.
(c)Represents the adjustment for depreciation, depletion and amortization expense related to the assets acquired in the Canvas
Transaction, which is based on the purchase price allocation. Depletion was calculated using the unit-of-production method
under the successful efforts method of accounting. The depletion expense was adjusted for the revision to the depletion rate
reflecting the acquisition costs and the reserves volumes attributable to the acquired oil and gas properties. The pro forma
depletion rate attributable to the Canvas Transaction was $6.29 per barrel of oil equivalent.
(d)Represents the increase to interest expense resulting from the (i) interest expense for borrowings on the newly formed ABS
note to fund the Canvas Transaction and (ii) incremental interest expense for borrowings on the Company’s credit facility to
finance the closing of the Canvas Transaction as follows:
Year Ended
(In thousands)
December 31, 2025
Interest expense for borrowings on newly formed ABS Note
$(26,858)
Incremental interest expense for borrowings on Diversified credit facility
(4,074)
Total transaction accounting adjustments to interest expense
$(30,932)
(e)Represents the estimated income tax impact of the pro forma adjustments from the Canvas Transaction at the estimated
blended federal and state statutory rate of approximately 24% for the year ended December 31, 2025. Because the tax rates
used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary
from the actual effective rate in periods subsequent to the completion of the Canvas Transaction.
(f)The table below represents the calculation of the weighted average shares outstanding and earnings per share included in the
unaudited pro forma condensed combined statement of comprehensive income (loss) for the year ended December 31, 2025.
As the Canvas Transaction is being reflected in the unaudited pro forma condensed combined statement of comprehensive
income (loss) for the year ended December 31, 2025 as if it had occurred on January 1, 2025, the calculation of weighted
17
Exhibit 99.3
average shares outstanding for basic and diluted earnings per share assumes that the shares issuable related to the Canvas
Transaction have been outstanding for the entire year.
Year Ended
(In thousands, except share and per share data)
December 31, 2025
Net Income (loss), pro forma combined
$480,067
Diversified weighted average shares outstanding - basic
72,969,687
Diversified shares issued in exchange for legacy Canvas shares as part of consideration transferred
3,718,209
Pro forma weighted average shares outstanding - basic
76,687,896
Dilutive impact of potential shares
1,508,905
Pro forma weighted average shares outstanding - diluted
78,196,801
Earnings attributable to Diversified per share, basic
$6.26
Earnings attributable to Diversified per share, diluted
$6.14
Potentially dilutive shares (1)
85,106
(1)Outstanding share-based payment awards excluded from the diluted EPS calculation because their effect would have
been anti-dilutive.
Note 5 - Pro Forma Adjustments - Maverick Transaction
The unaudited pro forma combined statement of comprehensive income (loss) for the year ended December 31, 2025 reflects the
adjustments listed below for the Maverick Transaction. These adjustments are expected to have a continuing impact on the combined
Company, unless stated otherwise.
(a)Adjustments are for the period January 1, 2025 through March 14, 2025, the date the Maverick Transaction closed.
(b)Represents the incremental accretion expense attributable to asset retirement obligations for the year ended December 31,
2025.
(c)Represents the incremental depreciation, depletion and amortization expense related to the assets acquired in the Maverick
Transaction, which is based on the purchase price allocation. Depletion was calculated using the unit-of-production method
under the successful efforts method of accounting. The depletion expense was adjusted for the revision to the depletion rate
reflecting the acquisition costs and the reserves volumes attributable to the acquired oil and gas properties. The pro forma
depletion rate attributable to the Maverick Transaction was $5.00 per barrel of oil equivalent.
(d)Represents the increase to interest expense resulting from the (i) incremental interest expense for borrowings on Diversified’s
expanded credit facility to finance the closing of the Maverick Transaction and (ii) incremental interest expense for the
amortization of estimated financing costs related to the amendment entered into by Diversified on the closing date of the
Maverick Transaction to increase the borrowing base capacity and commitment amounts on the Company’s revolving credit
facility as follows:
(In thousands)
January 1, 2025 -
March 14, 2025
Incremental interest expense for borrowings on Diversified's expanded revolving credit facility
$(3,590)
Incremental interest expense for amortization of expected financing costs
(648)
Total transaction accounting adjustments to interest expense
$(4,238)
(e)Represents the estimated income tax impact of the pro forma adjustments from the Maverick Transaction at the estimated
blended federal and state statutory rate of approximately 24% for the year ended December 31, 2025. Because the tax rates
used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary
from the actual effective rate in periods subsequent to the completion of the Maverick Transaction.
(f)The table below represents the calculation of the weighted average shares outstanding and earnings per share included in the
unaudited pro forma condensed combined statement of comprehensive income (loss) for the year ended December 31, 2025.
As the Maverick Transaction is being reflected in the unaudited pro forma condensed combined statement of comprehensive
income (loss) for the year ended December 31, 2025 as if it had occurred on January 1, 2025, the calculation of weighted
18
Exhibit 99.3
average shares outstanding for basic and diluted earnings per share assumes that the shares issuable related to the Maverick
Transaction have been outstanding for the entire period.
Year Ended
(In thousands, except share and per share data)
December 31, 2025
Net income (loss), pro forma combined
$480,067
Diversified weighted average shares outstanding - basic
72,969,687
Diversified shares issued in exchange for legacy Maverick shares as part of consideration transferred
21,194,213
Pro forma weighted average shares outstanding - basic
94,163,900
Dilutive impact of potential shares
1,508,905
Pro forma weighted average shares outstanding - diluted
95,672,805
Earnings attributable to Diversified per share, basic
$5.10
Earnings attributable to Diversified per share, diluted
$5.02
Potentially dilutive shares (1)
85,106
(1)Outstanding share-based payment awards excluded from the diluted EPS calculation because their effect would have
been anti-dilutive.
Note 6 - Supplemental Oil & Gas Reserve Information
Estimated Quantities of Proved Oil and Natural Gas Reserves
The following tables present information regarding net proved oil and natural gas reserves attributable to the Company's interests in
proved properties as of December 31, 2025, along with a summary of changes in quantities of net remaining proved reserves during
the year ended December 31, 2025. The information set forth in the tables regarding historical reserves of the Company is based on
proved reserves reports prepared in accordance with Securities and Exchange Commission’s (“SEC”) rules. The Company’s petroleum
engineers prepared the proved reserves reports as of December 31, 2025.
In addition, the following tables also set forth information as of December 31, 2025 about the estimated net proved oil and natural gas
reserves attributable to the Camino Transaction, and the pro forma estimated net proved oil and natural gas reserves as if the Camino
Transaction had occurred on January 1, 2025. The reserve estimates attributable to the Camino Transaction at December 31, 2025 and
the summary of changes in quantities of net remaining proved reserves during the year ended December 31, 2025 presented in the
table below were prepared in accordance with the authoritative guidance of the SEC on oil and natural gas reserve estimation and
disclosures. The Canvas Transaction closed on November 24, 2025 and the Maverick Transaction closed on March 14, 2025.
Therefore, both the Canvas and Maverick transactions are already included in the Company's net proved oil and natural gas reserves
information as of December 31, 2025.
Reserve estimates are inherently imprecise and are generally based upon extrapolation of historical production trends, analogy to
similar properties and volumetric calculations. Accordingly, reserve estimates are expected to change, and such changes could be
material and occur in the near term as future information becomes available.
Natural Gas (MMcf)
Consolidated
Affiliate
DEC Historical
Camino
Transaction
Adjustments
Total Pro Forma
Consolidated &
Affiliated
Companies
As of December 31, 2024
2,895,619
391,365
3,286,984
Revisions of previous estimates
777,934
(20,758)
757,176
Extensions, discoveries and other additions
16,341
96,543
112,884
Production
(295,723)
(32,608)
(328,331)
Purchase of reserves in place
1,031,562
—
1,031,562
Sales of reserves in place
—
—
—
As of December 31, 2025
4,425,733
434,542
4,860,275
19
Exhibit 99.3
NGLs (MBbls)
Consolidated
Affiliate
DEC Historical
Camino
Transaction
Adjustments
Total Pro Forma
Consolidated &
Affiliated
Companies
As of December 31, 2024
103,471
33,960
137,431
Revisions of previous estimates
1,521
(1,086)
435
Extensions, discoveries and other additions
—
6,178
6,178
Production
(8,821)
(3,056)
(11,877)
Purchase of reserves in place
68,804
—
68,804
Sales of reserves in place
—
—
—
As of December 31, 2025
164,975
35,996
200,971
Oil (MBbls)
Consolidated
Affiliate
DEC Historical
Camino
Transaction
Adjustments
Total Pro Forma
Consolidated &
Affiliated
Companies
As of December 31, 2024
18,524
12,103
30,627
Revisions of previous estimates
1,076
(1,467)
(391)
Extensions, discoveries and other additions
—
900
900
Production
(7,935)
(1,498)
(9,433)
Purchase of reserves in place
99,485
—
99,485
Sales of reserves in place
—
—
—
As of December 31, 2025
111,150
10,038
121,188
20
Exhibit 99.3
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
Year Ended December 31, 2025
The following table presents the standardized measure of discounted future net cash flows relating to the proved oil and natural gas
reserves of the Company and the Camino Transaction on a pro forma combined basis as of December 31, 2025 as if the Camino
Transaction had occurred on January 1, 2025. The standardized measure shown below represents estimates only and should not be
construed as the current market value of the Company’s estimated oil and natural gas reserves or those acquired estimated oil and
natural gas reserves attributable to the Camino Transaction.
Consolidated
Affiliate
(In thousands)
DEC Historical
Camino
Transaction
Adjustments
Total Pro Forma
Consolidated &
Affiliated
Companies
Future cash inflows
$23,713,859
$2,920,962
$26,634,821
Future production costs
(10,492,260)
(217,519)
(10,709,779)
Future development costs
(5,379,265)
(1,389,189)
(6,768,454)
Future income tax expense
(1,619,405)
—
(1,619,405)
Future net cash flows
6,222,929
1,314,254
7,537,183
10% annual discount for estimated timing of cash flows
(2,040,445)
(624,016)
(2,664,461)
Standardized Measure
$4,182,484
$690,238
$4,872,722
The following table sets forth the principal changes in the standardized measure of discounted future net cash flows applicable to
estimated net proved oil and natural gas reserves of the Company and the Camino Transaction on a pro forma combined basis as of
December 31, 2025:
Consolidated
Affiliate
(In thousands)
DEC Historical
Camino
Transaction
Adjustments
Total Pro Forma
Consolidated &
Affiliated
Companies
Standardized Measure, beginning of year
$1,396,921
$577,632
$1,974,553
Sales and transfers of natural gas and oil produced, net of production
costs
(879,252)
(179,271)
(1,058,523)
Net changes in prices, production costs, and development costs
1,439,378
99,830
1,539,208
Extensions, discoveries, and other additions, net of future production
and development costs
(283,207)
80,040
(203,167)
Acquisition of reserves in place
2,869,296
—
2,869,296
Revisions of previous quantity estimates
605,424
(13,726)
591,698
Net change in income taxes
(802,115)
—
(802,115)
Changes in estimated future development costs
—
25,682
25,682
Previously estimated development costs incurred during the year
—
85,479
85,479
Changes in production rates (timing) and other
(323,138)
(43,191)
(366,329)
Accretion of discount
159,177
57,763
216,940
Standardized Measure, end of year
$4,182,484
$690,238
$4,872,722
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v3.26.3
Cover
Jul. 02, 2026
Cover [Abstract]
Document Type
8-K/A
Document Period End Date
Jul. 02, 2026
Entity Registrant Name
Diversified Energy Company
Entity Incorporation, State or Country Code
DE
Entity File Number
001-41870
Entity Tax Identification Number
41-2283606
Entity Address, Address Line One
1600 Corporate Drive
Entity Address, City or Town
Birmingham
Entity Address, State or Province
AL
Entity Address, Postal Zip Code
35242
City Area Code
205
Local Phone Number
408-0909
Written Communications
false
Soliciting Material
false
Pre-commencement Tender Offer
false
Pre-commencement Issuer Tender Offer
false
Title of 12(b) Security
Common Stock, par value $0.01 per share
Trading Symbol
DEC
Security Exchange Name
NYSE
Entity Emerging Growth Company
false
Amendment Flag
true
Entity Central Index Key
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Amendment Description
This Form 8-K/A amends the Current Report on Form 8-K filed on July 6, 2026 to amend Item 9.01 to present the required financial statements and pro forma financial information related to the acquisition of certain affiliates of Camino Natural Resources, LLC.
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