Diversified Energy inks Gulf Coast natural gas supply contract

23rd Oct 2024 08:24

(Sharecast News) - Diversified Energy Company announced a new natural gas supply contract with a major Gulf Coast liquefied natural gas (LNG) facility on Wednesday.

The London-listed firm said the agreement, which would start in November, committed Diversified to supplying around 40 billion cubic feet of natural gas over three years.

Pricing for the gas would be fixed, indexed to Gulf Coast pricing, providing the company with greater predictability and helping to mitigate commodity price risk.

The company said the contract was aligned with its goal of supplying "clean American energy" to global markets, addressing energy security concerns in the face of geopolitical tensions, supply disruptions, and shifting consumption patterns.

In addition to the contract, Diversified said it had been able to capitalise on recent strength in natural gas prices to enhance its hedge portfolio.

The firm had added to its hedges for 2025 to 2027 at an average NYMEX price of $3.45 per metric million British thermal units (MMBtu).

It said the hedges were expected to protect its margins in the coming years.

"This supply agreement to a Gulf Coast LNG export facility is a great example of the market's recognition of Diversified's reliable natural gas production and operational efficiency while providing another lever for the company to enhance margins and deliver consistent cash flows," said chief executive officer Rusty Hutson.

"In line with the company's strategy to reduce commodity price risk, we believe this agreement, along with tactically adding to our 2025-2027 hedge position during the recent natural gas price strength, will help us to provide consistent, robust cash margins."

Hutson said the agreement reflected the critical need and strong global demand for natural gas as well as the importance natural gas played in powering global economies.

"We look forward to advancing our relationships with Gulf Coast LNG export facilities that share our commitment to building a future of energy abundance, affordability, and security."

At 0805 BST, shares in Diversified Energy Company were up 1.97% at 934p.

Reporting by Josh White for Sharecast.com.