Diversified Energy posts Camino $665M 2025 revenue
Diversified Energy Co files an amended report to provide Camino’s audited financials and pro forma data for the recently completed Oklahoma asset acquisition.
Diversified Energy Co (DEC) filed an amended current report to add historical and pro forma financial information related to its completed acquisition of certain Oklahoma oil and natural gas assets from affiliates of Camino Natural Resources, LLC. The amendment supplies audited Camino financial statements and unaudited pro forma results reflecting the combination.
Camino generated $665.2 million in revenues and $381.0 million in net income for 2025, with net cash provided by operating activities of $417.4 million and total assets of $2.48 billion. At December 31, 2025, Camino reported a revolving credit facility balance of $415.0 million and a standardized measure of discounted future net cash flows of $1.73 billion for proved reserves.
Positive
- None.
Negative
- None.
Filing Explained
The amendment adds Camino’s unaudited
8-K Event Classification
Item 9.01 — Financial Statements and Exhibits
1 item
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Camino 2025 Revenue: $665.2 million
Camino 2025 Net Income: $381.0 million
Camino 2025 Operating Cash Flow: $417.4 million
+5 more
8 metrics
Camino 2025 Revenue
$665.2 million
Total revenues for the year ended December 31, 2025
Camino 2025 Net Income
$381.0 million
Net income for the year ended December 31, 2025
Camino 2025 Operating Cash Flow
$417.4 million
Net cash provided by operating activities in 2025
Camino Total Assets 2025
$2.48 billion
Total assets as of December 31, 2025
Revolving Credit Facility Balance
$415.0 million
Outstanding under Camino’s credit agreement at December 31, 2025
Standardized Measure of Future Net Cash Flows
$1.73 billion
Discounted future net cash flows from proved reserves at December 31, 2025
Total Proved Reserves
296,145 MBoe
Camino proved reserves as of December 31, 2025
Camino 2025 Development Costs
$404.3 million
Development costs for oil and natural gas properties in 2025
Key Terms
pro forma condensed combined financial statements, standardized measure of discounted future net cash flows, successful efforts method, asset retirement obligations, +2 more
6 terms
pro forma condensed combined financial statements financial
"unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026"
standardized measure of discounted future net cash flows financial
"The Standardized Measure of discounted future net cash flows relating to proved reserves"
A standardized measure of discounted future net cash flows is a single number that converts a company’s expected future incoming and outgoing cash into today’s dollars by reducing later amounts for the time value of money and risk. Investors use it like a common yardstick to compare what a business or project is truly worth today versus its market price; imagine choosing between a promised series of future paychecks or a one-time lump sum now. This helps assess whether an investment appears over- or under-valued.
successful efforts method financial
"Proved oil and natural gas properties, successful efforts method"
An accounting approach used mainly in oil and gas exploration where companies treat costs for failed exploration as immediate expenses while only keeping successful well and development costs as assets on the balance sheet. For investors, this matters because it makes a company’s profits and asset totals more sensitive to exploration results—like a shopper who throws out broken prototypes but shelves the ones that work—so earnings and book value can swing more sharply depending on drilling outcomes.
asset retirement obligations financial
"The Company's asset retirement obligations ('AROs') relate primarily to its obligation to plug"
Asset retirement obligations are a company’s recorded promise to pay for dismantling, cleaning up, or restoring property when a long-lived asset is retired — for example decommissioning a plant or removing equipment. Companies estimate the future cleanup cost today and book it as a liability (and add the cost to the asset), so it affects the balance sheet, reported profits over time, and future cash needs; investors watch it like a planned bill that can reduce cash available for returns.
fixed price swaps financial
"commodity derivative instruments known as fixed price swaps to realize a known price"
A fixed price swap is a financial contract where two parties agree to exchange payments: one side pays a set, unchanging price and the other pays a variable amount tied to a market rate or commodity price. Think of it as swapping a fluctuating electricity bill for a steady monthly charge; investors use these swaps to lock in costs or revenues, reduce exposure to price swings, and make future cash flows more predictable.
equity method investment financial
"The Company accounts for its corporate joint ventures under the equity method investment"
An equity method investment is an accounting way to report ownership in another company when an investor has significant influence (commonly around 20–50% of voting rights). Instead of listing the other company’s full assets and debts, the investor records its share of that company’s profits or losses on its own income statement—like keeping track of your share of a neighborhood bakery’s monthly earnings. Investors care because those shared profits, losses and changes in the investee’s value directly affect the investor’s reported earnings and balance sheet, so this method can materially change a company’s financial picture and valuation.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What does Diversified Energy Co (DEC) disclose in this 8-K/A amendment?
DEC provides audited and unaudited financial statements for Camino Natural Resources Holdings, LLC and unaudited pro forma condensed combined financial information reflecting DEC’s completed acquisition of Camino-related Oklahoma oil and natural gas assets, as required under Item 9.01 of the Exchange Act report.
How profitable was Camino, the business acquired by DEC, in 2025?
For 2025, Camino reported total revenues of $665.2 million, net income of $381.0 million, and net income attributable to Camino Holdings of $358.2 million, according to the audited consolidated financial statements included as Exhibit 99.1 to the amendment.
What were Camino’s cash flows from operations before joining DEC?
Camino generated net cash provided by operating activities of $417.4 million in 2025 and $384.5 million in 2024. These figures come from Camino’s consolidated statements of cash flows included in the audited financial statements attached to the amendment.
How leveraged is Camino in the financials DEC filed?
At December 31, 2025, Camino reported $415.0 million outstanding under its revolving credit facility, with an $800.0 million borrowing base and $600.0 million elected commitments. The company was in compliance with all financial covenants as of that date.
What oil and gas reserves back the Camino assets acquired by DEC?
As of December 31, 2025, Camino’s proved reserves totaled 296,145 MBoe, including 25,094 MBbls of crude oil, 1,086,354 MMcf of natural gas, and 89,992 MBbls of NGLs. The standardized measure of discounted future net cash flows was $1.73 billion.
How does Camino manage commodity price risk in the data DEC provided?
Camino uses fixed price swaps, collars, and basis swaps on crude oil, natural gas, and NGLs. In 2025 it recorded a $112.8 million net gain on derivative instruments, and at December 31, 2025 reported $75.1 million net derivative assets on its balance sheet.
Where are Camino’s operations that DEC has acquired interests in?
Camino is an independent oil and natural gas company focused on acquiring, optimizing, and developing reserves in the Merge, STACK and SCOOP plays in the Anadarko Basin of Oklahoma, which is where the acquired wells, leasehold interests and related assets are located.
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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
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
(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:
Securities registered, pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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 | |||
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.
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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 | |
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.
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 |