Asset Retirement Obligations

12 Months Ended

Dec. 31, 2025

Note 13 - Asset Retirement Obligations

The Company records a liability for the present value of the estimated future decommissioning costs associated with its natural gas

and oil properties. Additionally, the Company records a liability for the future decommissioning costs of its production facilities and

pipelines when required by contract, statute, or constructive obligation. For the years ended December 31, 2025, 2024 and 2023, no

state contractual agreements or statutes related to production facilities and pipelines are expected to impose material obligations on the

Company.

In estimating the present value of future decommissioning costs for its natural gas and oil properties, the Company considers several

factors, including the number and state jurisdictions of wells, current decommissioning costs by state and well type, and the

Company’s retirement plan, which is based on state requirements and the Company’s capacity to retire wells over their productive

lives. The Company’s assumptions are grounded in the current economic environment and are believed to provide a reasonable basis

for estimating the future liability. However, actual decommissioning costs will ultimately depend on future market prices at the time

the decommissioning services are performed. Additionally, the timing of decommissioning will vary based on when the fields cease to

produce economically, which is influenced by future natural gas and oil prices and the retirement schedule. These factors are

inherently uncertain.

The Company incorporates annual inflationary cost increases into its current cost expectations and then discounts the resulting cash

flows using a credit-adjusted risk-free discount rate.

The components of the change in our asset retirement obligations are detailed below for the periods presented:


	For the Year Ended December 31,
(in thousands)	2025	2024	2023
Balance at beginning of period	$625,621	$468,843	$446,262
Additions(a)	195,923	105,614	3,192
Accretion expense	48,607	28,464	23,903
Asset retirement costs	(23,015)	(7,626)	(5,330)
Disposals(b)	—	—	(10,275)
Revisions(c)	41,562	30,326	11,091
Balance at end of period	$888,698	$625,621	$468,843
Less: Current asset retirement obligations(d)	24,857	6,436	5,402
Noncurrent asset retirement obligations	$863,841	$619,185	$463,441

(a)During the year ended December 31, 2025, $180 million and $11 million of additions relate to the Maverick and Canvas

acquisitions, respectively. During the year ended December 31, 2024, $64 million and $34 million of additions relate to the

Oaktree and Crescent Pass acquisitions, respectively. For further details regarding acquisitions, refer to Note 3.

(b)Disposals are related to the divestiture of natural gas and oil properties. For additional information, refer to Note 6.

(c)Revisions primarily represent changes in the present value of liabilities resulting from changes in estimated costs and economic

lives of producing properties.

Diversified Energy Co 10-K