Diversified Energy tanks as US lawmakers question well management practices

Diversified Energy tanked on Tuesday after four members of US Congress wrote to the company requesting more information on its policies and practices related to well management, well clean-ups and methane emissions.

At 1540 GMT, shares in the oil and gas producer - which operates in the Appalachian Basin in the US - were down 19% at 1,061p.

Four members of the minority party of the US House of Representatives Committee on Energy and Commerce wrote in a letter on Monday: "As the largest owner and purchaser of oil and gas wells in the United States, Diversified Energy is responsible for remediating a substantial share of the country’s aging oil and gas wells, but we are concerned that your company may be vastly underestimating well clean-up costs.

"Such an underestimation would threaten Diversified Energy’s ability to cover environmental liabilities associated with cleaning up its oil and gas wells, which could create thousands of orphaned, methane-leaking wells and undermine efforts to respond to the worsening climate crisis."

Diversified said it was reviewing the letter and plans to "engage in a positive and open manner, as it has continuously done", by providing information regarding its "peer-leading environmental and operational actions that underpin its responsible asset stewardship approach".

The company said one of the reasons for the information request was a 2021 media report "that broadly speculated and inaccurately described numerous items, including how the company addresses emissions and well retirement".

"Diversified has previously provided information on these topics and continues to transparently disclose all sustainability-related information, including emissions and well retirement, in its filings and annual sustainability reports," it said.

"The company has significantly expanded its well retirement segment, Next LVL Energy, allowing it to retire approximately 214 wells in 2022. Full modelling and accounting for the company's asset retirement obligations are audited by independent, global accounting firms and reserve engineers and transparently disclosed.

"In addition, Diversified has partnered with a number of states within its Appalachian footprint to retire state-owned orphan wells in a cost-efficient and environmentally sound manner."