Diversified Energy Company (DEC) Earnings Call Transcript & Summary

And we are going to talk a lot today about the ESG initiatives and how we fit in the future of the ESG and natural gas, but that's who we are. And so we are taking this new logo. We are rolling it out across our organization. And we are rolling it out through our investor relations information, which makes Eric and Jim really, really happy, and we had to change a lot of stuff. But at the end of the day, we have a rich history and we are proud of it. We have been here a long time. We have outlasted a lot of different companies and a lot of different people, and we plan on being here for decades to come. We talked about the agenda, but just real quick, we are going to spend probably -- this first session is going to be spent a lot around it, the environmental part of ESG. We will finish that up, have a Q&A session, quick break, come back, and then we will talk about some of the other things around ESG but also some financial information and some other things that you guys will be interested in hearing. Before I get started into the real presentation, I wanted to introduce just a few people that are here with us today. I will introduce Sandy in a minute. We have a couple of our other independent directors here with us today. David Turner, who was been with us for a couple of years now from the Regions Financial. And then our newest member, who just what -- a month, two months? Sylvia Kerrigan, who has just started with us, and she was at our first board meeting last week when we had our onsite board meeting, which was great. We are happy to have her. Obviously we have a lot of our analysts that cover the story in the room with us today, but we also have our brokers. We have our tenants and brokers who actually were the first ones on our account back in 2017. Tim Hurst-Brown, who is their analyst, was the one that really believed in the company and actually helped get it started. We also have our Stifel Group that came on later. And both of them have been really, really crucial in the development of this company over the last 4.5, 5 years. And so we are happy to have them. We have a lot of people. Anybody else? I know there's a lot of people in the room from London, if you raise your hands from the UK or London. So that's first time they've been able to travel in what, two years, to get into the US. So that's a good thing. We don't claim that. Nathan is here from Edinburgh. So we've got a full agenda. We have our A-Team here today. This is our executive team, some of our leadership in different parts of the company. I can tell you, it is an A-Team. We have built this company not only on good assets and operating assets, but we build it on good people. And we don't -- when we are hiring and we are looking for people to fill important roles in this company, we go after the best. And then these people come from all different backgrounds and all different companies, but definitely this is what makes the company go the way it does is these people. Some of them will be speaking today. A lot of them will be. The others will be around for questions after the presentations today, and we will be around to assist them any way they can. So let's start, corporate overview. We believe and I believe Diversified is a vital role and plays a vital purpose in this energy transition. We are poised to thrive during this energy transition. We are built on natural gas production. We are built on operations, all the things that we talk about on all of our investor relations meetings and all of our sales meetings and all of the RNSes that you see that we put out. We believe natural gas is going to be part of the future, and our model provides a very affordable, reliable and clean natural gas to meet the demands, the demand needs of the globe, the global demand needs that are out there. We are seeing it every day today as we look out there. We are seeing shortages and we are seeing prices go up. And this is going to continue until we get good firm policies in place to provide the natural gases needed. And what I really love about it more than anything is we are doing this but we are also -- we are doing heavy -- robust cash margins, and we are returning substantial returns to our shareholders along the way. That to me is the business model of the future. Natural gas being part of the energy transition, operating wells, doing it efficiently, robust cash margins, and returning -- good returns to our shareholders. That's a winning combination. We are committed to positively impacting the climate change. I want everybody to hear this because there is always questions about what's Diversified going to do as it relates to environmental and emissions and this, that and the other. We hear from all different parts of the media and everything else, what's Diversified's position on this? I can tell you our position is aggressive, okay? We have a zero tolerance policy when it comes to methane emissions. We are establishing that in 2022, our initial investment of $15 million that we are going to spend next year in 2022 -- and we will talk about all these initiatives throughout the presentation -- but we are going to be focused on methane emissions. And that's just the start. Next year's $15 million is just the start. We are going to set aggressive climate goals and we are going to reduce methane emissions, the methane emissions' intensity by 30% by 2026 and 50% by 2030. We are also moving up our carbon neutrality a decade from our original dates of 2050. We are moving it up to 2040. We can do that because now with the initiatives that we are putting in place -- already have in place, putting in place the money that we are spending to reduce methane emissions along with the technology that we know is coming in the next decade or so, carbon capture and other things, and what we believe is some real pertinent carbon offsets that we can look at as we roll down through the next several years, we believe 2040 is doable. Hopefully it will be even sooner than that. We are pursuing proactive voluntary methane emissions. We talk about here recently the EPA guidelines or the framework that they are coming out with as it relates to methane emissions and how they are going to hold companies accountable that will go down to the states to essentially enforce. What we are putting in place and what we really already have in place together, we have no problem with those. We believe we will not only meet those requirements but we will exceed those requirements. So I want everybody in the room, I want everybody that's online, everywhere that's listening, everything is written from here on out. We are serious about ESG. We are serious about methane emissions. We are putting our money and our actions to work as it relates to these things. Our model, in my mind, is a responsible stewardship model, which is another great ESG story. Because at the end of the day, we're taking wells that other companies own. They're producing well. We're taking them. We're putting maintenance. We're maintenancing them. We're spending money on them. We're putting capital to them. We're producing them. We're paying royalties. We're paying taxes. And we're responsibly retiring them at the end of their economic lives. By us doing that, it's reducing the reliance on further drilling and development. And so by keeping these wells in production, the other companies probably would not. We're reducing that reliance. We're taking care of the liabilities when they come due, which, in some cases, probably would not have happened with other companies that own the wells. And we're keeping the wells in production. We're doing the right thing. If not us, who would it be? And that's the story that I say all the time or the line that I've used. If it's not us, who would it be? At the end of the day, you want the wells, especially the conventional wells in Appalachia to be in our hand. Wells in Oklahoma, anywhere they are. You want them in our hands because we're going to spend the money, we're going to spend the resources and we're going to do the right things with them. Is it working? Okay. Let me know if it fades out on me again. Growing policy support, we're obviously a natural gas producer. We know and we feel that for decades to come that that's going to be part of the future. Things such as blue hydrogen, carbon capture, all the things that are going to be introduced over the next several years, we're going to be a part of the solution as it moves forward. 20-year journey. As I said before, when you start looking at these kind of slides you know you're starting to get old, and this one was definitely not approved by my wife. For that picture, I'm sure she would not approve of it. But that was 20 years ago when we first started the company, and I don't have as much gray hair back then, that's for sure. As you can see the growth over the last 20 years has been pretty substantial, far exceeded my expectations from where I started back in 2001. But you can see the enterprise value of the company. We're at 5,000x what we were when we started the company back in 2001, dividends and all the other things that we've done. The one thing that's always been the case and will continue to be the case as we started the company based on free cash flow and we will always be a free cash flow emphasis company. We're always going to put the emphasis on free cash flow. I'd make this comment all the time. I've never seen a company that free cash flows -- has good substantial free cash flow, keeps their leverage in check, ever fail. It's only the ones that don't do those things that fail. So we'll talk more about that as we get into our financial slides, but it's always been about free cash flow and it always will. We're a differentiated energy company. We obviously have assets in the U.S. We're listed in London since 2017. We obviously are considering and are looking at ways to potentially have a dual listing here in the U.S. Eric will maybe mention that a little bit later. We're now in 2 different basins. We're in Appalachia. Obviously, that's where I'm from. That's where we started the company. We're also in the Central region now, which we've entered this year, and have grown it pretty substantially in a very short period of time. But the way that we grow our company and the procedures and the way that we look at acquisitions has never changed, okay? It's disciplined growth. We're going to protect the balance sheet. We're not going to overlever. I promised our employees and there are some of them who are sitting here today, every time I talk to our employees, I always promise them, will never overlever this company and put it in jeopardy for the sake of growth. So we safeguard our balance sheet. We target acquisitions that are only accretive so that they have to be accretive to EBITDA per share, cash flow per share and all the different metrics that we look at. We will never do a dilutive transaction. And we're focused on execution. Once we own them, it's all about hedging production, making sure that we're locking in cash flows, operating the wells, optimizing production, driving efficiencies, driving synergies throughout the portfolio. That's where the cash flow generation comes in. When we first started operating in Appalachia, we probably had 35% to 37% margin. Over a period of time through scale, efficiencies, synergies and all the things that we do from a smarter asset management perspective, we're now at 50-something percent margins in the Appalachian Basin, even with prices where they were last year. So it's a very, very robust margin. You can see that we acquire, we optimize, we transport. All the things that we talk about, we're focused on acquisitions of low-decline long-life existing production. We buy the production. We get -- typically get the upside for nothing. We've put no value on it. We look on the -- from an operational perspective we have what we call our smarter asset management, but we're very intensely focused on operations. The folks that are here today that come from operations will tell you, it's a main and major focus on every day the way we look at our business, looking for ways to lower cost. There's no dollar that's too small. We're going to -- we'll look for anything we can and within our portfolios as we acquire wells to improve margins. And so we're -- and we try to be as vertically integrated as possible because at the end of the day, when you control your cost and you're not relying on somebody else, then you don't have margin compression. And so what we try to do is to maintain as much of our services as we can internally so that we don't have to worry. As we're sitting here today, obviously, everybody has seen the inflationary numbers over the last month or so. We're not as heavily worried about that because we have a very vertically integrated model. So a very differentiated energy company. I hear it all the time. You guys don't have any peers. We don't know who we can compare you to. I’d take that as a complement actually because I like the fact that we're differentiated that we have a model that nobody else has been able to duplicate. Again, this is another one of those slides that makes you feel really old. But 20 years of acquisitions. We've done $2 billion of these since 2017 when we did the IPO, which is really incredible. I mean we've done $2 billion worth of acquisitions. We've raised about $1 billion of equity in that period of time to fund some of these transactions -- to help fund these transactions. But all of them have been very accretive to our bottom line, to our EBITDA numbers and to our dividends per share. We've obviously entered into the central region here this year. Somebody asked me what we saw in the central region that we liked, I said it's a lot of different things. I mean, it looks a lot like what we've been able to accomplish in Appalachia. A very fragmented ownership of assets, lots of different owners, lots of different types of assets, different formations, assets that nobody is really focused on in terms of development anymore. We have really -- we feel this gives us the best opportunity to replicate what we've done in Appalachia here in Central region. You can see we've done 3 or 4 acquisitions, I think, in total now, including Tapstone and it quickly has scaled up to where it's probably, I don't know, 30%, 40% of the business. We feel like Central region, this area itself will surpass what we've done in Appalachia pretty quickly. There's a lot of opportunities here, a lot of production. And we're going to be in a very good position to take advantage of that as we move forward. We obviously have done the Indigo and the Tanos transactions within the Cotton Valley, Haynesville area. We really think there's a lot of potential there. We've done one asset purchase now in the Barnett. We love the Barnett. And then here recently, announced the acquisition of Tapstone in Oklahoma. We feel Oklahoma has a lot of upside. This asset was -- I mean, when we really dug in and started looking at this asset, we really, really like this asset. We feel like it has a potential -- a lot of potential for upside. And as we grow in that Oklahoma region and there's a lot of growth opportunity there, there's a lot of scale and synergies that we can create there. So all in all, you can see the cumulative accretive impacts of these acquisitions on the company, a 50% increase in our net production, and then our EBITDA numbers, a 71% increase in our EBITDA numbers. The other good thing about the Central region is compared to our Appalachian Basin assets, is the net pricing that we're getting. The basis differentials here are much, much less in terms of the way that we're looking at Appalachia, which typically are running anywhere from negative 60 to negative 80 stands on a monthly basis. Here, we're seeing at the high end negative 15, 20 and as good as Henry Hub price flat or a little positive. So a lot of good things and much higher margins in this area. Perspective of the current M&A market. I get asked this question all the time, what's you guys' take on the M&A market? What's going to be -- is there still stuff to do? If price is going up, are people still wanting to sell? The answer is the M&A market for us really hasn't changed much. It's been very robust over the last 12 months. It looks to be very robust as we head into 2022. Lots of reasons for that. Investors are really looking for consolidation, especially on the public side. They're looking to accelerate free cash flow in these deals. They're looking to get quicker delevering on the back end of consolidation, long-term synergies within the business, be able to scale more quickly than just pure drill bit. And the aggregation of undeveloped acreage and inventory. The opportunity set you can see is pretty large. And as you look across this country, in the fragmented ownership and operatorship of these assets, really puts Diversified in a position to be in the driver's seat as it relates to this. Because we're PDP-focused. We're not looking for undeveloped acreage per se to go out and develop. So there's a lot of those deals as you look out there in terms of some of the types of sellers that we're looking at. But really for us, and the price environment doesn't really matter, okay? Because we're buying PDP. And as I look at the next 3 to 4 years on the price curve, the only year that would give me any kind of heartburn would be next year. So what we need to do when we're looking at deals is get those -- get next year hedged as quickly as we can on the back of any transaction. The curve past that, it doesn't give me a lot of heartburn. It's in that 3 range, and that's a good spot, and I don't think it's going to have a lot of volatility compared to the next year. So low commodity prices, high commodity prices, doesn't really matter. We're seeing acquisitions and there will be further consolidation as we move forward. Makes us different than everybody else as it relates to this. So obviously, there's motivated sellers. There are strategic guys looking to raise capital to fund their organic growth through the drill bit, trying to -- private equity, really a big opportunity for us as we sit here today as the private equity guys who are really long in the tooth on a lot of their investments in some of these basins that we are looking at. They've seen the price increase. They see an opportunity for the first time in a while to be able to divest and probably recover some of their investment that they've probably been really concerned about because as they get out to 4 and 5 years, they don't really make a whole lot of money. Distressed -- there's still some distressed assets out there. We still see some bankruptcies. We still see some balance sheet problems. So those are who the motivated sellers are. The alternative buyers versus us per se. There's some private operators, smaller guys that have limited access to capital. The private equity guys that are looking now to try to see if they can find some value and dig back into some assets where there's potential value for them where they can get in at a lower price. And then there's public companies. And we're seeing a lot of public company consolidation, especially in the Permian as we sit here today. So these are the alternative buyers. The good thing for Diversified is we're proven. I mean, I don't -- I can't tell you, Jim Rode, the A&D guys sitting back there, we hear it all the time. We don't even mind taking a lower price from Diversified because we know we can execute. Execution is more important than anything else. And so for us to be able -- they know we have capital, they know we're able to execute when we put a price on the table, that's important to them. And so we've been very successful. We've even won a couple of transactions where we weren't even higher bidder -- the highest bidder. And so that tells you a lot about where the market is as we sit here today. Unlocking value from the -- we buy these assets, we have the undeveloped that comes along with it. We've been pretty successful in being able to monetize some of that value. We did a Utica transaction a few -- a couple of years back. We were able to sell $10 million – we’ve spent $50 million, we were able to spend -- or get $10 million for the undeveloped, ended up getting a PV30, 40 net purchase price at the end of the day. Here recently, we just announced that we signed a PSA to sell our Haynesville acreage that we picked up in the Tanos transaction or percentage of it, for $37 million net to us, with us and Oaktree, we both own a 50-50. But that $37 million reduces our purchase price by 1/3. So the returns on that asset now are really, really significant when you're able to drop the cost of value that you paid for the asset. There's other things that we look at. We look at drill co's. We've looked at asset swaps with other people and farm-outs. These are all ways for us to take these undeveloped acreage positions and get value out of them on the back end. Last slide here before I turn it over, just talking about U.S. natural gas fundamentals. We believe natural gas is set up for a pretty nice run. I think anybody you talk to, I don't think it's a big surprise. We obviously are sitting here today with pretty good prices. There's an increased pace of M&A in the markets going on, the Marcellus, the Utica, some of the bigger gas plays have -- you've seen some big deals in the Haynesville. So with fewer players, the less production. There's just not going to be as much development as there would be otherwise. The M&A markets are reducing the supply. The takeaway, obviously, we -- there's a lot of concerns around takeaway and getting pipelines built, which is slowing down the drill bit. When you don't have a pipeline that you can get gas out, people aren't going to be real concerned about putting a lot more gas in them. And so the takeaway capacity is really hurting some of the growth opportunity in the natural gas side. The demand continues to go up. We know electrification. Now they're talking transportation, some of the comments and the concerns around that are that the more cars you have that are electric, they have to plug into the power grid. Where is that power is going to come from? And so obviously, natural gas is going to play a big part in that. So the demand’s there. The LNG continues to be pretty robust and moving gas from the U.S. to some of the other countries, including Europe. And then the foreign exports into Canada and Mexico also are resulting in pretty high demand for natural gas. This is all setting up, in my opinion, for a pretty nice run natural gas prices. I'll be honest with you, a year ago I would never have thought that we have seen a [indiscernible] handle on natural gas ever again. And it just goes to show you in a short period of time when policies are starting to play against the industry, you're starting to see the pandemic that was here for a year or so and the demand starting to pick up from that, along with the muted production increases. I talked to several CEOs in the Marcellus, and they talk about how they have no intentions on growing production because there's no price from equity capital markets for growing production right now. And so they're not compelled to do it. And so we're going to see a situation where the supply is muted, demand is up, and we could see a nice run on natural gas prices over the next several years. And so we're pretty bullish on that. With that, I want to turn it over to another one of our independent Board members, Sandy Stash, who joined us a few years back from Tullow Oil to talk -- and she's also the Chair of our Sustainability & Safety Committee, and she's going to give us a Board perspective on some of these issues that we've been discussing.

Good morning, and I'll add my welcome to you from the independent directors, in addition to David and Sylvia, Melanie Little, who chairs our Remuneration Committee; Ben -- Martin and David Johnson, our esteemed Chairperson. And it's a pleasure to have all of you guys here from the U.K. and wonderful to see some old friends and great to see that we're able to cross the pond. I thought I'd start with -- if you’ll bear with me, maybe just a little bit of a personal perspective. I, as Rusty mentioned, was a full-time executive up until about 1.5 years ago in London. And when I decided to take on a plural career, I sort of wanted to choose wisely. And so let me just focus -- and Rusty used the word differentiated. And I think that really captures who we are and -- just maybe a little bit of additional background on myself also. I'm a petroleum engineer by degree, and I started my career actually as a drilling engineer, drilling foreman. I can tell you right now there weren't many women -- very many women that did that 40 years ago. But there's sort of a variety of things that just happen in life. I want to spend quite a bit of my career right at that sort of interface between the energy industry and what people outside the industry thought of us. I'd like to say that I sort of did ESG before ESG was cool, and there's some truth in that. And I think when first approached by Diversified, what struck me was this differentiation or what I'm going to kind of call contrast between us as a company and others. And sort of starting with the -- what I'm going to call a real focus on the socioeconomic model of the company. And many of you cover this sector so you understand that oftentimes how this industry runs, creates wealth for the jurisdiction. But candidly, a lot of times, workers kind of come in and out of the jurisdiction on rotating cycles, et cetera. And what struck me about this company was the fact that the nature of the business allows us to be locally run, local jobs, local commerce. And I can't begin to say how important that is in sort of the popularity and importance of an industry to a region. Secondly, we play an absolute critical role in the transition, and I'll speak more about this. And again, on a personal perspective, I was very attracted to the fact that this company did gas. And I'll speak more about that a little bit later. Thirdly, and then this is kind of an interesting one for me. I really was intrigued by the idea that it didn't need a lot of new infrastructure. Now trust me, when you're an engineer, you like to build big stuff. And to be candid, 200 frac trucks on a location, floating $5 billion FPSOs out to location is pretty cool. However, not so cool in the up and down cycles of the industry. But I'd add further, and I think really important for the ESG conversation today and particularly as it relates to climate, hugely energy-intensive. And just a quick story because I was with a Canadian company prior to my time with Tullow, and we were quite instrumental in the -- in sort of the development of the Marcellus. And it was a company that had a traditional background in conventional wells. When we started to plow into the unconventional, we forgot about those old wells. And literally, I couldn't have told you when and where and I think we had a couple of -- 500 or 600 of them, 1,000 of them. And that was sort of the mindset. And then to me, there was something really intriguing about a company that would utilize existing infrastructure. And again, from an ESG lens, I think that's even critically -- more critically important maybe than it was in my mindset a couple of years ago. This is a strong financial company. And when I describe this to a lot of my friends -- and by the way, when you're a petroleum engineer, most of your friends are petroleum engineers. And I'm so proud because I said, this company is run by bankers. They don't fall in love with the rocks. They don't want to do the next $5 billion company. These guys actually run it like you'd run a business. And to be honest, I found that very interesting. And I know Eric will go through some numbers a little bit later. Just the fact that we have the flexibility because of our low cost structure to sort of balance things out where you're not worried about a big debt that's coming due because of some CapEx project you invested in when oil prices were $140 and now they're $50. And there was something intriguing me about just a well-run company from a financial. And I think finally, and there'll be more about this Paul and Brad and others will speak about this later. Responsible retirement of assets at the end of life. And I'm going to just delve a little bit into policy because again, I've been doing this a long time in a lot of places. I can't begin to describe the number of wells in the woods of Appalachia, in the prairies of Oklahoma, shallow offshore Gulf of Mexico, that people have just forgotten about, and now are literally wards of the state. So the thought that a company could come in and through its scale and its ability to aggregate a lot of production, could run these wells cost-effectively, profitably, with the commitment and the financial wherewithal to fix them at the end of their life. And again, just delving into policy, I think, critically important in a lot of the conversations that are going on in this country, and I would say more broadly across the world. Our ESG journey. Well, it started before I was here. In fact, again, I would suggest that the Smarter Asset Management was probably the antithesis of an ESG -- approach to ESG. But formally about the time I joined, we formed a sustainability and safety committee for the first time and was asked to chair that. And then falling into 2020, we had published our first sustainability report at the very end of 2019 to 2020, which is actually an important moment for us because in writing those things, there really is an effort to kind of take stock in where we are, and I think it was an important message. We also hired Paul Espenan, who you'll hear from later as our VP of EHS. And we entered into, and I'll speak again a little bit about this later, a formalized enterprise risk management process, which was important to all aspects of our business, but I think it's getting critically important to ESG. Coming into this year, and I won't read the whole slide. I guess I was struck in working with these -- with Teresa earlier. I'm just going to focus on the verbs. We expanded, invested, expanded, expanded, initiated. And I think importantly, to make the point that this really was a pivotal year for us in our ESG journey and I think specifically in our thinking on climate. Rusty already mentioned this, but I'm going to go ahead and repeat it because I think it's quite important. We are announcing plans to spend $15 million next year. And I think importantly, $15 million that's focused on the highest priorities from all the work that Paul and Teresa and the teams and Brad's team did this year. We're announcing methane emissions reduction goals of 30% by 2026 and 50% by 2030. Coming out of the discussions in Glasgow the last couple of weeks, I will tell you they exceed international targets and exceed targets that are being set in this country through various policy discussions. And finally, and I think extraordinarily importantly, we are updating commitment to net zero by 2040. And again, the team will speak more specifically to some of the things that we're doing to cause that to happen. A couple of minutes on gas, and I know all of you here cover the industry and are aware of this. But I'm going to -- from a global perspective, and again, I have had the opportunity to work a lot of places in the world. And everything from the geopolitics going on now in parts of Europe vis-a-vis gas and some of the things that I experienced in working in Southeast Asia and Africa. I will tell you that the combination of the demand for people who deserve and need energy to grow their economies, coupled with changes to U.S. regulations on it and the ability to export LNG from this country, I think, is at a critical juncture. And I think we'll serve what I'm going to call the transition decades very well in the market for natural gas in -- across the globe. Closer to home, and the curve doesn't look all that different. And these are all published energy information administration forecast. Again, in this energy transition, gas is going to be critical to this country and to North America. And I guess, again, if I can just share a little bit of an anecdote in the sort of many things that I'm doing now that I'm not working full time. I do a bit of advisory work for a very large utility on the West Coast of the U.S. And it was one of these deals where a bunch of recycled executives gathered October of last year and October of this year. And candidly, our focus was really on safety. A year ago, we were very, very worried about the cycling that goes on with gas generation facilities. These facilities go up and down and up and down. I do a bit of this for EDF in the U.K. also. The interesting thing from last year in October and a couple of weeks ago, is we're not worried about cycling anymore because we're not turning them off, okay? Just an anecdote, take that as an anecdote. But literally, the concerns we were worried about wear and tear in equipment was replaced by the fact that something was what's just basically running full on. And obviously, with the energy demands in California. And I think that's an anecdote. But I think it's an anecdote I saw repeated with some of the facilities, again, that I served a similar role on in the U.K. So I think gas is becoming a baseload, kind of full stop, which brings me to my Rip Van Winkle slide. I call this, this because -- it is funny because it's [kind] of getting older, you kind of live with stories. But I recall very distinctly about 2010 when I was with Talisman Energy, and we were booming in the Marcellus and us and 200 of other companies. And we had a strategy session like we had last year in Pennsylvania. We had a number of power company executives that came to our dinner and had a bit of conversation. And I can remember one of the CEOs saying, this is all great, but until you guys can guarantee us a price for gas, we're not changing from coal. We know what coal costs. Okay? So this is 2010, this isn't the turn of the century or I mean this is 10 years ago. So about 3 years later, I moved to London and kind of -- I wouldn’t say forgot about the whole shale thing or whatever, but got focused in other things that Tullow was doing. And somehow in this Rip Van Winkle experience, I think, and I had to do kind of the math here, but somewhere around [indiscernible] or so, all of a sudden, gas took over a generation for coal, and you can see it on the graph there. And again, in the sort of transition decades, continues to do so. So the point being, gas is now at the heart of [indiscernible] and by all projections, will continue to be for a very, very long time. And I won't go into the numbers. I probably can't see them from here anyway. But I think the statistics are pretty astounding. And as Rusty said, we'll continue. And I won't focus [indiscernible] to say we're in a really good neighborhood. But for all the other stories that I tell, we represent 77 -- the states that we are in represent 77% of natural gas production, which is pretty astounding. And again, and many of you that know me for my Tullow years, it's really good to have the infrastructure and to have the supply and demand all in the same neighborhood. And I think we're uniquely positioned to do that. There's a lot of places in the world where that isn't the case. [indiscernible] on differentiation and very ably led by David Turner, our Chair of our Audit Committee. When the company took on a proper ERM process, enterprise-wide risk management process, huge focus on climate. And really, my reflection on this other than to say that in a matter of strategy, we have done scenario planning. When we consider acquisitions and divestments, we do scenario planning. And the reason I say that is, whereas -- and I always say that these kind of conversations tended to be outside of the room. It's now very much in the sphere of the financialization of what was formerly considered nonfinancial metrics and very, very much a part of our strategy. Operationally, and Brad and his team will speak more to this, but a tremendous amount of work on finding our leaks, thinking through equipment we need to change out, just smarter well asset management in the context of climate. And then Eric will cover more robustly some of the thinking on financials including -- and beginning this year and more robustly next year, executive compensation tied to ESG. And I think most importantly, for this conversation, executive compensation tied to climate and climate considerations. I think the other thing, and not on the slides, because this is again different from a lot of our peers. Strategy, Operations, Financial as a CEO, COO and CFO, all involved in the conversation. Not -- Rusty obviously leads us as our CEO, but I would tell you right now, the 3 of these guys and all of their teams are extraordinarily integrated on what we need to do about climate. This isn't an afterthought. That isn't something those guys in the other room are going to deal with. It isn't about messaging. It isn't about all the things that I think a lot of cynicism arises in this sector. This is about doing in a matter of climate, what we've done in the matter of everything else. Spent a lot of time on this. And just maybe a little bit of a prelude to what Brad and Teresa and Paul are going to share with us, I had to write this down. This is like the most awkward acronym ever. Task Force for Climate-related Financial Disclosure other than TCFD kind of rolls off your tongue, but -- just maybe a bit of a personal observation on this. I don't think that this is about disclosure. I think disclosure is the output. What TCFD is and we fully embrace the construct is what I find to be the absolute most strategic construct that I've seen to consider not just climate, but I think all matters of how to factor ESG elements into your thinking. On governance. And I've talked a little bit about the formation of this committee, the integration of the executive table in a matter of climate. We spent a lot of time on strategy and risk. And I actually put those 2 together because I think they're just different sides of the same coin, opportunities and risks. And I think that's important to some of the things that Rusty alluded to as far as certainly beyond the operational fixes that we will do, et cetera, how we need to think about this strategically to be part and to lead the transition, particularly in the regions we're at. And then importantly, the metrics and target. And again, we've done some work on that already in this year's compensation conversations, more to come. And I think the output of that, obviously, will be the transparency that this structure brings to communicate with all of our stakeholders, including many of you here in the room. So I'll close with that, and I think, turn over to you, Brad. Yes. Thank you.

Thanks for being here today with our leadership team. If you're on the leadership team at Diversified, if you'd raise your hand, make sure everybody sees where we got the bullpen over here. As Rusty indicated, we've got a talented team here. But Sandy, your participation today is great, along with David Turner, the Chair of our Audit and Risk Committee; our newest independent Director, Sylvia Kerrigan. We also have our other Board members from the U.K. online with us today. So that should show everyone that the Board is fully engaged in all aspects of climate and our ESG initiatives, and that's exciting for us. So as we migrate into the portion of the presentation that will provide further clarity on our environmental, social and governance initiatives, I really wanted to try to find the right words. The right words that would share our intent, our plans and our proven ability, as Rusty mentioned earlier, our proven ability to deliver results. And the words that I chose were culture wins. In Diversified, we truly have a winning culture. Our employees know how to execute, and you'll get to hear more of that later on. We know how to deliver results. And we're confident that we will win and we will deliver materially significant results with the continuation of our existing ESG programs as well as the expansion of our programs. Great team that's going to be presenting today. I'll introduce my fellow coworkers here in just one minute. And I'm confident when you leave this presentation today, you'll have a full understanding of our detailed action plans and our clear targets, as Rusty has already indicated some, [Audio Gap] Culture supports all aspects of ESG. It's not just E, it's not just S, it's not just G. It's all aspects of ESG. We always have and we always will. As you guys know, our business model is built on long-term sustainability. And we have an unwavering commitment to our employees and to the communities in which we operate. And our commitment to transparency and good governance is very evident in all of our materials and all of our interactions. As Rusty mentioned earlier, and I think Sandy mentioned in her personal comments, our business model is unique. It's unique because we generate significant cash returns for our investors but we also have the ability to meet our ESG commitments. We're constantly working on continuous improvement. We take action every day. We don't talk about it. We take action. We're going to do the same thing with our ESG initiatives. You'll hear a lot about our Smarter Asset Management program. Those of you that follow us have already heard a lot about our Smarter Asset Management program. But this program helps us deliver on a daily basis, the stewardship promise that we've provided. Like, as I said, all aspects of ESG, not just E, not just S, not just G. I want to talk about the energy transition. Rusty already took one of my taglines here, which it may have been your original anyway. I'm not sure. I think Rusty does get the credit. Company does play an important role in the energy transition here in the United States. We meet numerous needs in the communities in which we operate. We improve assets, we provide jobs. We pay taxes. We pay royalties. We provide leadership, and we provide energy to all the communities in which we operate. And we've heard others say it, and we really believe it, if not Diversified then who? We're an important piece of the energy transition puzzle. The puzzle can and will be solved, but it does require puzzle pieces. And our proven ability to be a good steward of mature assets is an important piece of that puzzle. Our employees, over 1,300 now are placing new pieces in the puzzle on a daily basis. We are addressing the needs, as Sandy indicated earlier, we are addressing the needs that many other companies neglected. We're helping solve the puzzle. We're reducing emissions, we're improving safety, we're providing clean, affordable energy. I read a nice article from McKinsey Consulting over the weekend and the one quote in that article really stood out, and the quote is this: Cutting emissions requires cutting emissions. The energy that we produce, the actions that we take, we are cutting emissions. We know that our products and our actions are absolutely helping solve the energy transition puzzle. So everyone today, if you received a bag, received a 3-piece wooden puzzle that I built here on the page, please let this simple yet effective puzzle be your reminder that an investment in Diversified is absolutely producing a positive impact on the environment. Plus, it's a good little coaster to put on your desk for your drinks. So as we progress into our agenda here, we're going to talk about our progress. We're going to talk about our actions. We're going to talk about our plans, and we're going to talk about our expanded asset retirement program. I will point out a couple of pictures here on this page. You see 2 of our well tenders utilizing the new emissions detection equipment that we’ve purchased. We've already put it in the field. We're already using it. We're developing plans so that we can absolutely help extend the zero-tolerance policy we have for natural gas leaks. But this time, I'd like to introduce Teresa Odom. Teresa was appointed our Vice President of ESG and Sustainability earlier this year, and she will be sharing our climate and ESG strategy. She's been a very instrumental member in our Investor Relations team for the past 2.5 years. During this period, she has developed great relationships, both externally with our shareholders, but also internally with our members of management. She understands our business, but she also understands our great ESG story. Sandy mentioned earlier about our sustainability reports. Teresa has been the primary author for our 2019 and 2020 sustainability reports. We've received many great compliments about the content and quality of these reports, and Teresa is the reason for that. So I'm excited that Teresa is representing us today in this important role. Teresa, take it away.

I'm excited about this role. We've got a lot of great exciting things going on at Diversified. And I see this role as one of advancing and communicating the progress and the commitments that we're making towards ESG. But while I hold the title, we are 1,300 employees strong, and every one of us is responsible for ESG and sustainability. So I'm just glad to be a part of that. I'm glad to be a part of an opportunity like today where we have the ability to showcase what our teams have done as it relates to our daily approach, the asset integrity and environmental stewardship. And it also allows us an opportunity to really showcase and share with you the long-term strategy that we put in place for ESG and climate. If that -- as we focus on our -- excuse me, as we focus on our commitments in ESG, really what better place to start than with the objectives that we set out for ourselves for 2021. We put these objectives in place at the end of the year. And if you've followed us and followed our year-end reporting from 2020, then you will have seen this particular slide on the left-hand side there, where we laid out the particular objectives we intended to focus on this year, and we also laid out a commitment. We said that we were going to identify, improve and monitor. And that was related to those actions and those activities that we knew were important to our ESG story, and we knew were important to our investors. So given that commitment, and in conjunction with our rebranding efforts, you'll see here on the bottom, our new ESG logo that specifically says, identify, improve and monitor. With that comes a bit of measurement as well, measuring and monitoring, but including it in this logo is a constant reminder for all of us of the expectations that we set for ourselves as a company as it relates to ESG and a reminder to our shareholders that we heard you, we listen, we're taking action on that. So when you see that, know that we're dedicated to identify monitoring and improving. We have made significant progress on the 6 objectives you'll see outlined there on the right-hand side of the page. I'd like to take an opportunity maybe to speak to just the first couple of them. And you'll hear certainly the rest of our team speaking to the remainder of those throughout the course of today. One of our objectives for 2021 was around risk control, specifically to strengthen controls and processes for top-tiered identified enterprise risks. And you'll see 7 enterprise risks outlined on this page. Our enterprise risk process is just that an enterprise risk process. But what I want you to take away from today is that it's about climate. We've got some climate, some cybersecurity and some commodity price volatility initiatives and actions on this page because we felt like we made significant progress on those. But what I want to focus on is the climate. And I want to specifically point you to this. If you looked at our 2020 annual report, then you will have seen these 7 principal risks outlined, but you will have seen climate and ESG risk lumped into a broader category of legal, regulatory, environmental and reputational risks. As we work through this year, as we continued conversations with our stakeholders, it became very apparent to us that climate and ESG was not a regulatory risk. In fact, it was a strategic risk for us. But we know with strategic risk also comes strategic opportunities. So that's how we're going to think about climate and ESG going forward as a strategic risk that comes with strategic opportunities. And we're going to allow that to guide our direction of travel as we move forward with how we advance our ESG strategy and how we communicate that to our stakeholders. Just very briefly, for the 4 sub-bullets under climate risk, the data governance process for our emissions producing equipment, you'll hear that's largely a part of our Project Fresh, internal Project Fresh commitment. And you'll hear more about that from Paul coming up here in a minute. The TCFD and the methane intensity targets, you'll certainly hear about from Brad and I coming up here shortly as well. But one other thing I wanted to bring to your attention is we have laid out a plan. We have a plan to net zero, and we're going to share that with you today. But recognizing the significance of climate and ESG and it being a strategic risk, we brought on board and partnered with a global consultancy to review our plans. That's what we felt was in the best interest of our company and of our stakeholders. So we've engaged a partnership to review our plans, to look at our plan, to see if we need to amend those plans. Perhaps there's things we haven't thought of. Perhaps there's a different way we need to think about things. But most importantly, to help us solidify those plans. So that will be our actions going forward as it relates to our strategy. One thing that Brad mentioned that we are exceptionally proud of is our ESG reporting. We interpret that as our way of sharing with the stakeholders. What's important to us and seeing the results of the progress that we've made against those items that, again, we've identified, improved hopefully, and certainly, that's what we work towards measuring them and monitoring them. And so that's our way of sharing that. And as Brad mentioned, we've published a couple of sustainability reports. Our inaugural report came out in early 2020, which was based on our year-end 2019 information. And we felt like it was a great report certainly from where we were at that point in time. But if you know anything about Diversified, then you know we are not complacent. We don't want to be complacent. We want to always seek improvement. So with that in mind, we put together a 2020 sustainability report that came out early this year, which we did feel was a marked improvement over our 2019 report. So we were very excited about that. But now we're excited to take the next step and say, okay, what can we do better? What can we do better in our 2021 sustainability report that we intend to publish in early April of this next year? So we've set for ourselves steppingstones, if you will, of making those progressive improvements every year. It's what our stakeholders want. It's what we want and so look for another marked improvement in our sustainability report. We know -- one thing I'll mention in particular on this, we know that our ESG-minded investors certainly rely on our sustainability reports for information, but we know that our ESG rating agencies do as well. So we do take a very proactive approach with those ESG rating agencies. We try to speak with them early and often to make sure that they are including our most recent and robust data in their actual ESG ratings for our company. Another objective that we had in 2021 was related to TCFD disclosures. You've heard Sandy say it's not just about disclosures. And we would agree with that. So when we set this objective, it clearly was with an understanding that we would be diving into scenario analysis, that we would be looking at climate risks and opportunities and the outcome of that clearly would be our disclosures. So while this chart has actually marked improved disclosures as the TCFD journey continues, it really equally could be and should be marked improved performance because that's what we've done. Let me take a minute to just explain what this chart is meant to reflect. In 2020, we asked an independent party to look at our disclosures as it related to TCFD and tell us what we were doing right or tell us what we weren't doing. We asked them to specifically judge us against the 4 main pillars of TCFD, and we asked them to rate us against a group of 8 of our peers. And what they told us didn't surprise us. We knew at that point in time, we had not stepped into that TCFD journey like we needed to. So we actually came in at the bottom of what they deemed a basic disclosure level. We saw that as an opportunity. We took advantage of that. We took that bull by the horns. In our 2020 sustainability report, we stepped into that. We leaned into that. We started our initial climate scenario analysis. We beefed up our disclosures. We ask that same party a year later, please go back and replicate that. Compare us to these 8 peers again. Compare us against the 4 pillars again. Tell us, have we improved? Thankfully, we did improve, and we were excited about that. We moved from the bottom of the basic category of disclosures to now a partial category of disclosures. But while we see improvement and we're excited about that improvement, again, we see this as an opportunity. There's more movement to be had. So we will take that to heart, and we will put that into our next 2020 sustainability report. Specifically, as it relates to the ongoing initiatives on the bottom there, you've heard Sandy talk about the expanded role that the CFO needs to take in TCFD. That's something that we're very passionate about. As Sandy mentioned, it's a broad reaching perspective. It needs to be a function of the CEO, the COO, the CFO. So we're just making sure that everybody is playing a role in coming up with some of that. The rest of those initiatives, certainly, you'll hear about as we move forward. As we think about our disclosures in climate risks and opportunities, we know that GHG emissions has to be part of that conversation. And we want you to know that we take a very comprehensive approach to that. In fact, our view of GHG emissions is very much aligned with our business model. It starts with acquisitions, works all the way through our investing in people, processes and systems, equipment so that we can integrate those assets, so that we can operate those assets until end of life. So we don't operate or think about GHG emissions in a silo. It's broad speaking. It's related to our business model. And let me just touch on a couple of those in particular, for instance, M&A screening. It's a simple question for us. Is this asset a right fit from an emissions perspective? What is the emissions of this asset on a stand-alone basis? What is the emissions of this asset going to do to our portfolio if we filled it into our portfolio? Those are the things that are important to us that start at the top of our business model. As it relates to investing, we know that investing in the right people, processes and equipment is paramount. It's paramount for us to be able to drive a platform that allows us to proactively and innovatively reduce those emissions. So that's what we think about on a consistent basis. And really regulations and reporting go hand-in-hand. In many cases, as it relates to regulations and our GHG emissions reductions efforts, they're voluntary efforts. In many cases, they're voluntary efforts. We're not required to do it. But we know that in every case, we are meeting if not exceeding the regulatory requirements as it relates to that. And as we think about reporting, it's absolutely paramount as well that we report information so that our stakeholders can make informed decisions. We focus on emissions reductions. We do know this. We can't develop a plan if we don't really know what we're planning for. So for us, that means starting with understanding what our GHG emissions are. What are the sources of those emissions? The information that you see on the left of this slide is information that we published in our 2020 sustainability report. We also replicated it in our financial report and account. And it's a summary of what our 2020 total Scope 1 emissions are. Basically, we are 43% -- our emissions are 43% CO2 and 57% methane. Our CO2 is largely driven by our other -- our reported other combustion category for us, that means compression. That is largely what is driving our CO2 emission. As it relates to our methane emissions that is driving that, our reported other vented emissions as well as our fugitive emissions. And specifically for us, that really means our pneumatic and the leaks. So if we are going to do anything to reduce methane emission intensity, then we know our focus has to be on pneumatics and leaks. And that is what drove our program in 2021 as it related to our emissions reductions. So let me just take a minute to give you a brief update on what we've done in this year to accomplish some of those objectives and reducing our emissions. First, we expanded our resources, both in people and in technology. We increased the internal expertise of our EH&S group with Paul, adding some very critical LDAR and data analysts, very prudent additions to our SaaS and additions that will make us better going forward to make sure that we're aligning as we need to on reducing emissions. We also added equipment. You see the equipment here. You've heard Brad talk about it. You saw a press release hopefully last week where we announced that. We have those equipment in the hands of our well tenders. So for every site visit that they're on, that equipment can be put to use. We also voluntarily engaged in an aerial surveillance pilot program. Very productive program for us, very positive results. And the results of which are driving us to include that kind of program and that kind of technology going forward. You'll hear more about that in a minute as well. And we certainly improved the processes. Again, our Project Fresh, I'll let Paul speak to that in total, but we also have an emission screening tool that Paul will also speak to that we use as part of that M&A screening and as part of that comprehensive approach to GHG emissions. So using our 2021 objectives and our accomplishments as a springboard, that helped us develop, okay, what are we doing in '22? We know what we wanted to do in '21. We were able to accomplish those objectives. And so what does that mean for '22? You've heard both Rusty and Sandy say, we're investing $15 million next year in emissions reduction initiatives. We were already investing in emissions reductions initiatives. So when we put that $15 million with the things that we were already doing like asset retirements, like expanding our people and our processes and our systems and equipment, then really, we're spending in excess of $20 million next year towards emissions reductions. Brad, would you give us just kind of an update on kind of operationally what your group is going to be doing for that?

I’d be happy to. Thanks, Teresa. Did we make a good decision on putting Teresa in this role? I think we did. So we're pleased that our financial strength, as Sandy mentioned earlier, our financial stability really provides us the opportunity to invest material funds in our emissions reduction efforts. So we are taking a comprehensive approach as has been indicated in our -- but our initial focus will be on reducing methane intensity. So let me share just a few of these items. You can see them on the screen. You can -- you'll have them in the presentation. But we're going to utilize our expanded emissions detection equipment to not only identify leaks, but we're going to eliminate them. We're going to implement a multiyear aerial surveillance agreement or a multiyear agreement with an aerial surveillance company. That is also going to help us to identify leaks, eliminate them and repair them. We will install air compression capabilities at our compression facilities in our larger well pads. And what that's going to do is going to allow us to eliminate methane emissions that are being used in the pneumatic valves. We're going to continue our smarter asset management program of eliminating excess compression. You'll hear from Maverick Bentley later about that. But when we eliminate excess compression, we eliminate CO2 and methane. We're also going to review opportunities to convert combustion compression over to electricity compression, which will also help. As we've also mentioned earlier, we're pleased to accelerate our carbon neutrality target year from 2050 to 2040. We plan to invest a 6- to 7-figure investment into the support of planting trees here in the United States. And lastly, we're investing additional resources and capital into our well plugging team. We want to expand our plugging capacity, and we plan to be able to double the number of wells that we plug by the year of 2023. Teresa already mentioned, this is $15 million of incremental spend. We're already spending roughly $3 million in Paul's EH&S team. We're already spending $2.5 million on our existing plugging program. We have numerous line items within our LOE or lease operating expenses where we're repairing leaks, where we're working on asset integrity. So we're well north of $20 million as we move into 2022. Not just 1 year, it's multiple years. So we want to lay out some of our plans as we look at our midterm, which we're considering roughly 5 years and then our longer-term plans as we move at 10 years and beyond. We've set a target to reduce our methane intensity by 30% by 2026 and 50% by 2030. And as we've already said, and I'll just reiterate that again because I do think it's important that we took 10 years off of our original aspirations we announced last year from 2050 to 2040. Now we know that new technologies and innovation will assist us in achieving our targets. So our mid- and long-term plans include a few of these items. We're going to continue our aggressive capital investments for emissions reductions. A lot of the things that we talked about will continue for the next several years. We're going to evaluate the acceleration of well plugging to actually generate carbon offsets. We're going to be installing new technology to help us identify and detect emissions on our facilities. We're also evaluating the repurposing of our assets for carbon capture, carbon sequestration. And we're going to evaluate how our assets could possibly be used to support the growth of hydrogen as an affordable energy source. So we're taking a very comprehensive approach to lower our emissions intensity, and we agree with our senator from West Virginia, Joe Manchin, what he said about obtaining a cleaner environment. He said, you cannot eliminate your way to a cleaner environment. You can innovate your way. So with our winning culture that we've already talked about, we will be very aggressive in the pursuit of innovation in order to lower our emissions. I'll introduce Paul Espenan. Like Teresa. Paul Espenan is our Vice President of Environmental Health and Safety. He's a 35-year industry veteran. He's worked internationally and across all aspects -- all basins in North America as an EH&S professional. Paul is very focused on developing a great culture of teams because he knows, as we've already said, that culture wins. He has great experience in air emissions, safety and managing many regulatory relationships. So Paul is going to provide some more details about the actions that we're taking to drive improvements. Paul, take it away.

Thanks, Brad. Thrilled to be here. As has been mentioned, I've been at Diversified nearly 2 years and many of the projects that you're hearing about today have been on our collective drawing boards since that time. So I want to impress upon you that we've been busy on these topics for some time. It's so important to realize that many of the things you see here today did not happen overnight, and it took a large team focused on this over years to come to this point. So we know that the best ideas come from those people who are closest to the work, and we know that we have an amazing workforce and that when we all focus on a problem and looking for a solution, we know that when we focus on that, that we're going to get good ideas. And so in the spirit of educating our entire workforce on the topic before us, we do a lot of things. And one of the things that we did that we want to share with you is to have a video where we begin to educate every single person in our company about what's at stake and the opportunity before us. [Presentation]

Audio issue maybe? I'll do the voice over, basically explaining to our folks that there's a huge opportunity in that our efforts can play an important part, as Sandy mentioned, in the overall transition. And we're seeking their ideas. And at the end of the video, there's a place for them to click and provide those ideas. Some of the projects that I'm going to mention to you today are employee generated, very important to note that these ideas that have come forth as a result of our efforts to gain alignment have come from our employees directly at the front lines of our operations. We have a great team, as Brad mentioned, there's about 24 EH&S professionals, but if you were to ask in a room where Diversified people are, how many EH&S professionals are in the room, everyone's hand goes up. This is because we have the most engaged, passionate field employees that I've ever experienced in my professional career. Education is the foundation of that. So we're also seeking to educate ourselves in a lot of ways by working not just with EPA in their efforts, but sharing some of the initiatives that we've learned with those groups such as Natural Gas STAR and the Methane Challenge. We're working with industry groups like The Environmental Partnership and The Independent Producers Forum, but also with NGOs such as Nature Conservancy, to have meaningful projects and also has been mentioned Alvarez & Marsal, in terms of making sure that our work is relevant and on track. You can see that we've engaged some experts here in several areas, whether it's assurance, reporting our plan to net zero, accuracy in reporting, our air emissions verification and also having a consultant that's guiding us effectively in TCFD. So importantly, we're committing to having our 2021 submissions verified by an outside expert to say that what we submit is, in fact, representative and accurate of our emissions. Brad is going to highlight the first part, and I'll take the second.

Yes. So Teresa mentioned earlier, Project Fresh. This was a project that we initiated at the beginning of the year. You've heard it once, you're going to hear it probably several times today, we strive for continuous improvement. We knew we needed to continue to build our inventory, build our emissions information, get our -- improve the accuracy. And so we initiated Project Fresh at the beginning of the year, really under Paul's leadership, but it was a cross-functional team. We had our IT organization. We had our EHS. We had all of our field operations team. And we really wanted to look for ways that we could improve everything that we were doing in regards to emissions. And Paul is going to share with you some of the success that we've had this year.

Absolutely, Brad. So if you're going to reduce, you have to have accurate data. So we needed to be absolutely certain that what we had was the most accurate possible. We have that. We have an excellent baseline. There has to be a governance process, a very strong one. We have that. You have to reduce the amount of theoretical factors that you're using and you have to increase the actual factors that you're using. We've maximized that, and we will continue to maximize direct measurements of our emissions over the use of theoretical factors. But also what's really important is you have to have new insights into where the sources are so that you can accurately carve a strategy to reduce. We have that. We also had to build a list of potential projects known as a marginal abatement cost curve. Those are the projects that are going to [ shoot ] up, prove to be our journey to net zero in the short-term reduction of methane and in the long-term reduction of CO2. So we have what we need to proceed with great authority and knowledge. And so the -- all these plans that we have now have a very strong foundation.

Rusty mentioned earlier that he had been here the longest as part of the company. Well, I've been here the second longest. And what I can tell you is that we've always had a zero-tolerance policy for natural gas leaks. And what that really means is, if we detect the leak at any of our facilities, on any of our well pads, we fix it immediately. We always have and we always will. Now with the new emissions detection equipment that we're putting out in the field, it's going to help us expand that detection capability. And Paul is going to share more about that here now.

Right. So we've coined this: By land and air, making leaks rare. And that rhyme is important because look, all of us need memory devices to keep things front of brain, and this is just one of those things that we use at Diversified to build that culture. And I'm going to expand on all of these things here. So just real briefly, audio, visual and olfactory. All of us have the ability to see, hear and smell gas. But we don't all have the ability to act. So it's important that we train the people who can act how to use their senses in that regard so that they're always looking. The fact is that all of our operators have been doing this for much of their careers. The difference now is we're going to put some powerful devices in their hand to confirm what they already knew. RMLD and the use of a GT44 handheld detector, which I'll talk about in just a minute, we're going to put those devices in their hands every day. And then lastly, aerial surveillance. The technology of aerial surveillance is impressive, very, very impressive. And so we're going to go aggressive and commit to doing aerial surveillance of our assets in a lockstep fashion with what's being done on the ground. But what's being done on the ground? We visit our wells a lot, a lot. Over 100,000 site visits each month, and we're leveraging that knowledge of AVO inspections to act when leaks are found and as Rusty has said, zero tolerance for leaks. So we're going to get aggressive. And I give credit to Rusty for making this very clear because this is a message that's going down to all the guys that are on the ground. They understand the stakes. They understand what you understand. And that's very powerful that we have all these folks on the ground every day with that awareness and the understanding of how their job connects to a much, much greater issue. So let's talk about the technology. I've had this device now, which is built in Scotland, okay? I want to point that out that we now have a fleet of 600 of these defined devices in our hands and actively being used. And first of all, what's important is you understand what is the definition of a leak? Well, depends on who you ask. But if you ask the EPA, they define a leak under their strictest terms as [indiscernible]. And the first thing you'll observe is that all of the technology that we're using is well below those levels. Second of all, how many units do we have? We want to have a ratio where all of our operators have at least this device in their hand capable of going to one part per million detection limit. So that's all proactive and that's all voluntary. Secondly, this device, which is on in this room... But while we've been talking here, I've been watching the numbers and they've been ranging from 10 parts per million to 20 parts per million, and you say to yourself, is that right? It is right. Normal atmosphere in a room like this, that's what we expect. So an action level for a leak is very important conversation for us, and we have action levels that are very low so that an operator can tell if the leak is actual or if it's part of background. Thirdly, probably a very widely known device, the FLIR GF320. This is used to comply with EPA rules. And we do have about 128 facilities that are governed by Quad Oa, EPA rules, but we also are using this in other proactive efforts that are not regulated. Lastly, aerial surveillance, highly accurate, highly sensitive. Our inaugural flights where just the stunning success. We're going to commit to expanding that. Here's an example of -- some of the information that we gained from our inaugural flights and others, you can see that this is what it looks like when something shows up, but this is a typical example of the kind of report that we get back. And then very quickly, we give this turned over to our folks in the field to get out there and actually fix it with a very high bias traction. Our estimates are that -- this is avoidance, right? So this is nothing that ever would get reported. This is just proof that we're out there avoiding leaks every day, about 187 metric tons, CO2 equivalent reduced on an opportunistic basis. An example of a project ...

[indiscernible]

Absolutely. And very important. Thank you, Rusty. Really, very importantly, we have a bias to do this for a lot of reasons, not just ESG, but also because that's gas back in the pipe. And I think that, that point is often lost, that we do have incentives to get every molecule back in the pipe. And so when you hear we're getting aggressive on leaks, there is a good side of that. So about a $1.1 million gross revenue as a result of this project, which was fairly large. So this is an example of an innovative change that we've made this year. This came from our operations folks, and they identified, hey, if we make this change, we can reduce the amount of time that a well removes liquids from its wellbore, and therefore, reduces the number of times that a well blows to the atmosphere on a factor of at least 4x reduced. As a result of that, we went out in a very quick way. When this was identified, I think it was about a month, right, Bob? About 1 month's time, we had well tenders make this change at 220 sites. And the result of that is an actual reduction of 18,150 metric tons CO2 equivalent. So this is something that had been reported and is now reduced this year. Just one example. Acquire. We screen the assets ahead of time. We get data from data rooms and -- but also through interactive questions, we make sure we get high-quality GHG data. We then can prepare an emissions profile of an acquisition target. And with great confidence and perhaps most importantly, we know exactly where the opportunities are very quickly. Then also through those conversations, good begins to happen. This project that's highlighted here, Barnett area methane reduction is a result of a conversation that we had during our orientation. So what happens at Diversified is when we onboard folks, we onboard them for environmental health and safety. But we also have some very detailed conversations about our aggressiveness on reducing emissions. As a result of one of those conversations, the manager came forward and said, "Hey, I've got a project for you." And we put it into practice very quickly. And here's the reduction as a result of that. As former asset in the Barnett area was using methane or using gas to propel water and we've just changed that process 145 tons -- 45000 metric tons CO2 equivalent reduced. This would be avoided this asset has yet have been reported, it would have been reported but it now will not. [indiscernible] reported, if that makes sense. Though important to remember EPA filing system is an iterative process. We always use the best data that we have to report and it is expected and in some cases required to update the EPA if new informations becomes available and that is a very common practice and that we benchmarked that against our peers to have a good understanding that, that is the expectation. When you compare us to others, some very important things to keep in mind, intensity will tell the story. Our intensity is where we're going to focus on our reductions, if we buy more assets of course our emission absolutely are going to increase but our intensity will come down. Production is the best comparator, simply because we're all in product service lines mid-stream or water management can skew that data. And our intensity is going to be driven by our model, more component counts means more potential leaks and then also higher volumes have provide a larger denominator. Important difference is and how we report. The European market we report through IPCC and those difference -- and those are different from the EPA, for example, the global warming potential of methane IPCC use 28 and EPA uses 25 pneumatics. For intermittent pneumatics EPA 13.5 which we believe is firstly, overstated and IPCC we use consensus data which indicates 5.5 standard cubic feet is a good factor. Also vehicle fuel use is included in IPCC but not EPA. But important to note again we're going to have an independent verifier of our emission for 2021 reporting to be absolutely certain that what we report is of the highest accuracy possible.

Few important items related to our asset retirement program. As you'll hear from Eric later on and as you've heard from Eric and me, over the last several years. Asset retirement is a big part of our business. It's not a portion of our business that we outsource, that we take lightly. We take it very seriously and we operate just like we do all of the other parts of our businesses and we're striving for operational excellence. We've had another great year in 2021 with our retirement program. First of all, I'll say that we're in compliance with all 4 of our state agreements that we put in place on a proactive basis over the last several years. We established an internal team in the state of West Virginia. Establishing that team has allowed us to expand our capacity significantly. But even more importantly or maybe equally importantly, is we've been able to lower the cost -- the average cost of our plugging operations. So great success there. And so based upon the success we've had in West Virginia, we're going to replicate that success with setting up an internal plugging team in the state of Pennsylvania for 2022. And with our expanded capacity that we developed this year, plus the expanded capacity that we will develop next year. We're setting targets to more than double the number of wells that we plug on an annual basis. And as I previously stated, we believe that by 2023, we'll be able to plug 200-plus wells per year. Last comment here is -- Paul and Teresa both spoke about the consultancies, the expertise, the partners -- the partnership that we developed. We've got partnerships here in the room, but we also have partnerships with other companies that help us provide a great product and run our business well. And so we're pleased to announce our partnership with Montrose Environmental to assist us in the development and management of our net zero plan to obtain carbon neutrality by 2040. Montrose brings together solid build capabilities. They've got an extensive workforce. They have a great understanding of the oil and gas operations as well as environmental consulting expertise. They've got 2,000 employees across 70 offices in North America, Australia and in Canada. And they're going to serve as our project manager or program manager to assist our teams in the development of plans and actions. We're looking at all of our emission calculations. We'll put a plan in place to manage our emission projects while also exploring new opportunities and technologies to further reduce our emissions. So with that, I will turn the floor over to our CEO, Mr. Rusty Hutson to provide some closing comments on our environmental section prior to a Question-and-Answer Session.

Thank you, Brad. You can see -- is my mic on? You can see we put an extensive amount of time planning into our environmental piece of ESG. I don't normally read from these slides, but I want to make it very clear today about the message that we're trying to send not only for our employees, but to our stakeholders, our investors, our lenders, everybody who works with us in some capacity. We are heavily focused on ESG. We have the utmost time and effort that we're going to be putting into this. We believe we're the right model. You've heard about the model today. We're going to get into more of the model later. Right people. You've seen the people that we have on the stage talking about these issues. They're highly experienced. They're empowered. We've given them the empowerment to go do their jobs and to do it at a very high level, and it's the right time. We know where this issue is in the world that we live in today. We're going to help us in this energy transition and -- which I believe and as Sandy and others have talked about is natural gas is going to be part of that. We're uniquely situated to lead the transition. We have a very financial and operational successful company. We've talked -- we'll get into a lot more of that here in the second half. But financially, we're capable. Our balance sheet is strong. We have an extensive operational focus, and that puts us in a good place. to make these initiatives occur. Again, zero, zero means none, zero tolerance as it relates to methane emissions. That -- I don't want anybody to get confused on that on the phone here, anywhere else. We have a zero tolerance for emissions program -- emissions, and we will fix them as we identify them. Environmentally-sound asset retirement. We -- and not that this is supposed to be something is supposed to be great, but we do plug more wells in Appalachia than anybody else. Period. There's nobody else that plugs as many wells as we do. That retire as many wells as we do. We have a process to identify and to do these things in a very efficient manner. We do it cheaper than anybody else. There's a CEO in Appalachia, and I'm not going to talk about who it is, but he asked me very specifically here recently. Can you send your asset retirement folks to help me get the cost down in our asset retirement program. So we know how to do it. We know that we need to do it, and we'll do it when these wells become uneconomic. We have a responsible production from existing assets, our PDP focus. It helps to keep us from needing to drill more wells in the industry, which, again, is part of that ESG story. We're never going to have an ESG story that's going to be successful if we continually rely on new production continuing to come on over long periods of time. And then natural gas, obviously, we believe it's going to displace a lot of different coal, for example, [indiscernible] to some degree. But all these new energy sources, we're going to be in a position to be part of the solution as we move forward, okay? So I want everybody to understand that ESG is very important. We've talked about the goals that we've set. We're going to be meet or exceed all of our guidelines in the frameworks that the EPA has set out. All of those things, we're going to be proactive and we're going to be successful over the long haul. And so with that, I guess we're out of time for Q&A. As the battery is running out.

Thanks. So as I mentioned, we're going to have questions from both in the room and from the webcast. Al is walking around with a microphone for the people here, so the people listening on the webcast can hear the questions. And we'll start off with Neal Dingmann, please.

Rusty, a really quick question. You mentioned about plugging advantage you're doing a number of wells. Could you talk about a couple of things there. just if you can mention plans for how many you're thinking about in ballpark figures? And then when you talk to an operations team to decide what's the criteria that suggests, I mean a lot, obviously, with prices now where they are versus even a year ago, a year ago that might not look so much like you want to keep running it looks quite different today. So I'd love to hear your thoughts. I've got one other follow-up.

Yes. Well, as we said earlier, we're -- we have minimum requirements to plug with the agreements, the consent orders that we have with the states in which we operate in Appalachia, that's 80 wells per year. But we, on a minimum basis, we have to do 80. We're -- this year, we've done 115 so far. I believe that's the right number. We're going to expand that to 200 on a going-forward basis. Now whether we get there in '22 at 200, we've got to get the resources on the ground to get that done. The external resources are not there. So we're putting our own crews on the ground in Pennsylvania to go with the 1 that we have in West Virginia will allow us and afford us the ability to do more. As it relates to how we factor in which wells go on that list to be abandoned or retired and which ones don't. It really just depends -- I mean, Brad -- I'll let Brad add some color to that. But at the end of the day, if it's not producing, and there's no economic way to get it back into production where we can produce it economically, then it goes on the list. I don't care what state it's in or whatever. If there's a -- obviously, if there's any kind of issue related to environment or anything like that, we plug it immediately. We don't even wait for anything there. But as it relates to economics, production producing wells, we evaluate every one of them to determine. If it's a well that's going 3 to 5 Mcf or 5 barrels a day, however you want to look at it, that there's no cost to operating it. We're obviously going to operate it because it's not costing us anything to do it. Do you want to expand on that?

Well, I'll just reiterate, order of selection safety, the safety issue will plug it, there's an environmental issue, we'll plug it. And then we revert to our consent agreements where we've got wells -- specific wells lined out on those agreements. And so that's really what drives the selection process. I did mention, as we look at our mid- and long-term plans, we are going to look at some programs to accelerate some plugging in order to generate some carbon offsets. And so that's something I think we'll be able to make some good traction on that as we move into the first of the year.

And then what's the G&A cost versus you think sort of industry average these days? I know you all do a good job.

Yes. I mean -- Brad?

Well, we averaged slightly below $25,000 per well, and that's low. And again, it just reflects how we like to operate our business with a very efficient operating model. I mean we strive for excellence in the plugging operation as well.

And then just lastly, I think in [indiscernible] a number of wells and Rusty and I have talked about that. sounds like though, even with the number of wells you have there, Mid-Con, et cetera, you feel like you feel like you can more than stay in front of this as far as the P&A requirements and everything else.

Well -- yes, I think, again, the stuff that we -- the assets we've acquired in the Central region have not been -- a lot of those are newer producing wells in the last 10, 15, 20 years, but there's not as much the age or the vintage that we've seen in conventional Appalachia. So we don't really see a lot of what we consider to be retirement -- near-term retirement liabilities in the central region.

In fact, what we're seeing is a lot of opportunity in the Central region to return well back to production.

Next question comes from online, Matt Cooper of Peel Hunt. I learned that some of the -- our British analyst friends like to package together 4 or 5 questions and pretend it's 1 question. I'm going to break this up here. Can you talk about how the $15 million in incremental investment on methane emissions is split between upfront cost versus recurring costs and what proportion of diversified wells have emissions more than the 3 tons per year, so we'll need quarterly monitoring.

So from the from the 3x perspective that the EPA mentioned, we have a very small percentage of our wells that will meet that criteria. So we're not very concerned in regards to the impacts there. Now as Rusty mentioned, and as you saw from the programs that we're implementing, we have a zero tolerance policy. So we will continue to do a very robust emission detection effort, and we'll work to repair any emissions that we detect. What was the first question.

The $15 million split between upfront costs and recurring costs.

Yes. So as we characterize the $15 million, we said that was our initial investment into our emissions reduction efforts. And so there will be some recurring costs there as we continue to be very aggressive in addressing pneumatic valves, other surface equipment, potentially compression conversion. There'll be some conversion there. There's -- there will also be a mixture of some expense as well as some capital. But that -- but this $15 million is going to be a great step and a big step forward to allow us to make a significant move towards our 30% and 50% targets over the next 5 to 10 years.

There's the mic?

[indiscernible] Investec. First of all, thanks very much for the presentation, very interesting so far. And I guess I'll ask that question, maybe a slightly more straightforward fashion. You're spending $15 million on emissions reduction. Is that a level of spending you think you're going to have to sustain for multiple years at that rate? Are you going to increase that rate of spending? How should we think about it as I think the concern is, is it going to cost you an exorbitant amount of money to get on top of this? Or is it going to be a more modest amount that you've talked about today on a more sustainable basis?

Well, let me say this, the $15 million, we believe, is going to make a significant impact on our current emissions that we listed up there earlier, which I think Teresa had in her presentation. As we move past '22 into '23, we'll evaluate kind of what's been reduced, what's still on the board come up with new numbers every year. But is it going to be, I think, well is the word you're using exorbitant -- it's not going to be exorbitant costs, not for what we as a company now with our earnings and such are, it's not going to be -- but we're going to spend what's necessary on an annual basis. to make the fixes and get the improvements that are necessary to get our intensity levels to those levels that we talked about and then at some point, to be the carbon net 0 that we talked about. Probably great expensive cost. But the $15 million is a great start. Year 2, we'll evaluate. We're going to spend what we have to, but we're going to get it done.

I think Eric is going to provide some additional information and guidance in our financial section to help put that in box for you.

Great. And the other point you made was that lots of your -- you're meeting or exceeding the EPA targets, but there seems to be a small good board of different regulations and targets and initiatives and the U.S. methane emissions pledge and all the rest of it. So how are you able to analyze the upcoming targets that are going to be set for the industry? And how will you stay ahead of them?

The EPA framework that's out there right now. We still have some time on it to determine. It's not final yet. They set the framework. There's a -- I think there's like a review period and the comment period, and there's all kinds of times. So it really won't kick in at the very earliest till the end of next year. But we don't care. We're going to reduce emission. What I have found out is all these targets and all these other things that they talk about are calculated the way they're going to be calculated, just reduce emission. If you reduce emissions, then the targets -- we'll play very well on these targets. So that's what we're going to do. We're going to focus on the emissions. These targets are going to come and they're going to be what they are and they're going to be calculated the way that they're going to be calculated, but we're going to focus on reducing emissions.

Can I just add on that. Just again, in contrast to 10 years ago, which kind of remarkable. -- there wasn't a lot of good ways to measure this. In fact, there was quite a -- and some of you may remember, a big debate around were unconventional more methane intensive. And I think the power of some of the stuff that Paul described getting them in the hands of our guys will be a much more efficient way to get the low-hanging fruit, fix what needs to be fixed. So I think -- and by the way, -- It's a comment, but I think, again, we're probably rely situated to make the best of that new equipment.

And one last one, please, on midstream and gas gathering and that sort of thing. So people talk about well, but of course, there's much more emissions associated with in general, gas gathering and pipelines. And you haven't really talked much about that and how you may be addressing.

No, we did. And in fact, I think Brad went into it very clearly, we're going to look at ways to take -- compression is the big thing, okay? That's the one that really the emissions are...

And those are CO2 emissions...

Not methane emissions. Sorry.

Right. And so what Brad has is a plan on switching some of those compression units out from natural gas to electricity, which is a -- I mean that goes from whatever it is, to pretty much 0. Some of the other things that you're talking about on the compression side.

Well, so where we utilize pneumatic valves in our compression operations. replacing the source of the valve actuation to air compression versus methane. So we're focused on that 43% of our emissions, which is CO2 and the 57%, which is methane. So it's well pads and compression equipment.

Mark Wilson, Jefferies. First question is, is it possible for you guys to have a location and records for all the wells in your assets? Just so many thousand of them. Do you have line of sight on all those wellheads. And I'm talking about legacy Appalachian assets here. And the second question is you've put the -- you've talked about the cost of putting in the field recording devices for emissions. What do you think the cost of redressing old wells and changing valves and what have you to these new things across the -- as a producing set.

So to your first question, the answer is absolutely yes. We know where all of our wells are. We have a significant, let's call it, GIS system for mapping, and we have a tremendously talented GIS team, pipelines, wells, compression facilities and we can get as detailed as we need to be. And that's really a lot of the information that we're supplying for our aerial surveillance partner. We're providing them all of that detail in what's called Shape files, and then they will fly -- they'll take those files and they'll set their flight plan. So yes, the answer is yes, we do. As it relates to the older Appalachian conventional wells, the answer really is we don't have to do anything in many of those wells from an equipment replacement perspective. Many of the wells are no longer needing the use of the pneumatic valves, -- And so the equipment that's on there is just being bypassed and not being utilized, not actuating, not creating that methane emission from the operation of the valve. And so a large majority of our conventional Appalachia production. There are no -- even though there might be a piece of equipment on the well site -- or on the well pad, it's not being utilized. And that's a big -- that's a part of our process as we take our inventories and determine the source of our methane. Now as it relates to some of the newer well pads, where there is -- where there are actuations and there are pneumatic valves and there's artificial lift systems in play. Those are the large -- those larger well pads are what we're going to look to replace the pneumatic use of methane with air compression.

Alex [indiscernible] at Stifel. So looking at that $15 million, and of course, it's like the focus on whether it's going to be an exorbitant number and so on. But actually, thinking about what you were saying earlier, and this came up in Paul's presentation, feels like there's some significant OpEx savings and revenue incremental opportunities that will come from this spending. So is there any way of quantifying what you might expect in terms of incremental revenue from this activity, say, if it's going to deliver $10 million of incremental revenue, then actually, this is a pretty rapid payback and it's worth doing regardless. This is exactly what you were saying earlier, Brad, in terms of this is activity you would do anyway. So how does an analyst put this into their model or whatever just to find out what will be the value -- the NPV incremental that will come from all of this.

So as Paul mentioned earlier, the MACC analysis, the Marginal Abatement Cost Curve. So that is going to be a process that we will work with Montrose consultant that we've engaged to help us on our plan a net 0 we'll look at all those projects, especially on these facilities where we're going to install air compression, we will be able to calculate what that methane savings is by keeping it in the pipe. Sitting here today, I've not done all those calculations. But yes, there absolutely will be some level of savings. Now it's not a tremendous amount of methane that get submitted. It's just the number of times it happens. So we will be able to do that. As it relates to the aerial surveillance programs and emission detection equipment that we've put in place, we actually track that now in our just normal operations. But as Paul indicated, that one inaugural flight that we flew on one of our pipeline segments with both wells and pipeline, we estimated that on an annual basis, it was over $1 million worth of additional sales opportunity. So yes, that process will be part of our plans. And then as appropriate, we'll communicate that to the market as best when those occur.

Question from online. Could President Biden's infrastructure bill potentially contribute to the cost of your well plugging program?

So actually, the infrastructure bill provides funds. I think it's up to $7 billion that will be provided to the states to plug and abandon orphan wells at the state zone. So the funds that are available in the infrastructure bill don't relate to us. They really relate to the states and giving them capital so that they can reduce the number of orphan wells that they have on their books. And so as it relates to us and accelerating any kind of programs that we have and accelerating any kind of programs that we have. It won't be impactful at all.

I'll just add 1 comment there. You used the term orphan well. As Sandy indicated in her comments about why she thought diversified was differentiated, none of our wells are orphaned. We are -- we have a stewardship responsibility over the wells that we've acquired. And so we may have some that are not producing and that we are working to bring back online, which I think we've done, Bob. 850 or so this year. But that's our stewardship model. We don't have any orphan wells.

Another question from the webcast. Can you give us a sense of how big an impact the initial $15 million can make on emissions, particularly versus the 30% reduction by 2026 target that you've guided to.

We thought we were starting out good with setting a 5-year target starting [indiscernible] 30%. What portion of that will be next year is to be determined. But that's part of the process that we'll engage with Montrose and our team as we start building and implementing those programs. And I think as we fully develop that plan during 2022, we'll be able to have a higher level or lower level of granularity related to those.

And 2 things there. Keep in mind, reduction has to do with methane intensity. We're going to be reducing methane emissions substantially through these programs. The intensity is calculated completely different. It's essentially emissions over production in theory. So the emissions intensity by the 30% still represents a lot of emission. And so our emissions reductions will be through these programs that Brad's talking about, will be substantial and then the intensity levels will follow.

I think Paul and Teresa both talked about it, but the fact that we now have a very good baseline estimate as accurate as we can be of what needs to be dealt with. I think it's going to be very helpful in sort of building year-on-year very transparently tracking our progress.

Other question here from David Round of Stifel. Your plugging activities have been coming in under budget. Are there any specific reasons for that? And is there an opportunity to outsource the expertise that you're building in-house?

Great management by me. I mean, Brad and our plugging team do a fantastic job. And we look at the retirement of wells the same way we look at the production of wells. We put a lot of time and effort into how can we drive the cost down? How can we get lower cost to get the same regulatory function done. States sign off on it every time and releases of our liability. But these guys have worked effortlessly on that. I think 1 thing that we've done is put a team on the ground in West Virginia, which has helped to save from the third-party costs that we would incur otherwise. And we're also working with the states and to find ways to be more efficient. So I don't know if there's anything else you want to add there but...

In a similar manner that we look at our midstream business to obtain that vertical integration. [indiscernible] their margins really plugging it very similar. It's a vertical operation, part of that business. And so we're able [indiscernible] to keep that safe [indiscernible] to benefit. As it relates to -- I think the question was leveraging our expertise. We're going to expand up our customers first, and then we will some point in 2022, how much and what opportunities we have to expand either within our existing operation or potentially outside of that.

A follow-up from Stifel and this is directed partly at management and also the Board of Directors. Regarding M&A, emissions reduction targets are becoming the norm across the industry. So you might find some very cheap assets for sale on the market for higher intensity assets. At what point might you look at something like this? And is there a buffer in your targets to transact and still meet your goal?

I think it's a great question. One of the things that we started doing, especially as we started entering the central region is that's part of our evaluation of any acquisition we do, as we've shown on these slides. It's very important to understand the baseline that you're picking up as you acquire those assets. And it will become -- and this is something we've had some conversations with our partner, Oaktree. As we evaluate these transactions we will probably start to evaluate some kind of price adjustment related to how much work, how much capital it's going to take to get the intensity levels that are necessary that we're targeting as a company. And I think that's going to start to play into transactional valuations.

Yes. And then I'm speaking for the Board, and I mentioned it earlier. I put this squarely in the financialization of previously known non-financial metrics. And in the same way with every acquisition, and we've got a very, very thorough process on that, that we look at what any given acquisition will do to our OpEx per barrel oil equivalent in all the other financial metrics, this is another metric. -- and obviously, a critical one. And again, that's the importance of that integration of Brad and the CFO, Eric, all of the other executives in the company under Brad's leadership. So it's -- we spent a lot of time as we should on considering acquisitions. And I would also add that to the question, that may become a very important metric even in our interest in a particular asset.

Another question on the M&A team. Let's go to Mark first, I'm sorry. Mark has a follow-up.

And this, I think, speaks a little bit to the non-financial metrics you're just talking to the and also the stewardship model. So in the court of social media or news networks, we've seen what a person with a [indiscernible] of an old well head in and wood, a very sensitive methane meter can do. So is it the case that you would expect down a line that a diversified well ahead and keeping with the branding and stewardship, there won't be such old wellheads to be found. They will -- you'll [indiscernible] and you'll recognize it as a diversified well ahead. liquor pain always makes people think things are better. But if you get my point, the power of not one...

Yes. No, I hear what you're saying. The answer is yes. We want to be in a position where we have a very recognizable assets across the whole operation. The truth is when you buy assets within 12 or 18 months, you're not going to get to all of them to be able to do all of that work quickly. And so we -- and we've looked at this in the same way that we do production on wells in terms of we're going to focus on the things that have the highest impact first, no different as it relates to methane emissions. So when we buy a package of wells, we're evaluating them. Most of the wells that in this -- that you were referring to, were very nominal amounts of emissions. We're still going to fix them, and we did, and we did. It's zero tolerance, but we were already focused on things that we felt like had a much higher impact to emissions total first. And so -- but the answer is yes. We're going to fix everything. Everything is going to be fixed. It's all going to look special or plugged, one or the other, which I means there's just going to be something sticking it out the ground saying is plus. But at the end of the day, yes, the answer is we're going to fix them all. But we always are going to focus on the things that have the biggest impacts first.

And again, building on that. And I think it's part of the reason [indiscernible] in the infrastructure. And I think it really has been focused on the methane contributions from all of these work as well as I said companies have candidly just walked away from. So again, I think the strength of the model that it's either going to be operating, making money or it's going to be plugged. And I think that's a really powerful message that I haven't seen replicated amongst our competitors.

Whether it be -- yes. Well, there'll be zero emissions you mean?

Well, I think that's what we're shooting for. I mean at the end of the day, we're going to be carbon neutral, it's going to be 2040 or potentially earlier, you never know. I mean there's the technologies that have come in play and all that. I will tell you this, is that the portfolio as it exists today, we're going to be high intensity on it, and we're going to be all over those. And so when can we get to where there's nothing emitting? I can't answer that just sitting here today, but I can tell you that there's going to be a significant effort on it all the time.

And I think too -- and we alluded to it again in the comments, you'll hear more from our operating guys today. I've never been with a company that knows how to focus the attention of 1,300 employees. And I think that message to the guys that are out there every day now with tools in their hands, not to just measure it, but to measure it and fix it. And I think the in-source model we have where we're not relying on contracts and bringing in whatever and ever. I think it's just -- I understand that the cultural nuance of that inside of the company. And I think we're going to be really good at it.

Yes. And I'll just -- and I'll end that comment with this is that our goal and what we -- what I have said to our investors. We're going [indiscernible] headed this way. They're going to get sick of hearing about what we're doing from an ESG perspective. we're going to find all the leaks. We're going to identify them. We're going to fix them, and we're going to monitor. And so it's going to be a continual process. We're going to continually put it in front of our investors to show progress. here's what we did. Here's how many wells we fixed. Here's the emissions that were reduced. Here's where we're going. And it's going to be a constant communication so that there is no somebody saying, "Well, we don't know what you're doing." You're going to know what we're doing. It's going to be a constant communication of the efforts and the progress constantly.

[indiscernible] around the web cap around acquired assets. Roughly what is the carbon dioxide equivalent intensity of the central region wells versus your legacy Appalachian well.

I'll let Brad answer that question. But I will tell you this, the intensity level of our assets we've acquired in the Central region, will be accretive to our total company. Brad, you can answer the rest.

Well, so a few things to think about. One is number of wells, much lower in the Central region, higher production on a per well basis. So the denominator of that calculation is much higher, which is going to create a lower intensity. There are some additional pneumatic valves, on an intensity level, Paul, I believe it's roughly increase us, but at least [indiscernible] 4.2 on methane intensity. So we think it's going to be in the 2 to 3 rigs. And that's based on our initial estimates. That's before we get the opportunity to really go there and to look at all of the details of their reporting as well as their operations, the measurement -- their actual measurements versus theoretical and so we will apply the same level of rigor that we have done with Project Fresh once we have the ownership of the asset, we're going to do the exact same thing with these. And we've actually already started that with a couple of transactions that we've already closed.

And just -- and maybe building on the earlier question about the Board. That is something in metrics and executive compensation. that will be a factor. This is going to be every bit as important as other aspects of the accretive nature of acquisitions and just overall management of the portfolio. So it's kind of laser-like focus and more to come on that.

That means will be 0 next year. Don't pick up on that.

We have time for 1 or 2 more questions depending on how long it takes to answer this next very technical question. How many pneumatic devices do you have that methane in total versus how many you plan to replace and by methane emission amount, what percent reduction in pneumatic device-related emissions do you expect to get from the ones you replace.

Paul?

Can we give him the mic, please, so that everyone can hear.

Any pneumatic devices do you have that emit methane in total versus how many you plan to replace.

So first of all, we have to understand that not all pneumatics are created equal. A lot of the focus has been placed on what's known as intermittent pneumatics. Those were the factors I talked about during my presentation that are most carefully scrutinized. So when you target your pneumatics, it's very important to know which ones are going to have the most impact. if you count our pneumatics, which is publicly available right now for Appalachia, we reported approximately 15,000 total pneumatic devices of varying types. Okay? The new assets will have as reported, perhaps a couple of thousand additional. So to replace those, if you look at -- we're going to target the ones that are the most emission intensive. It's difficult right now to put a number on how we would do that. But I would say that with our focus on this, getting the ones that are the most highly concentrated in large pads and then also in compressor areas where they have the most, we're going to make a significant impact this year on this, and then we'll be glad to update on how we're going to make that progress. But those are the raw numbers in terms of the total count that's publicly available information.

Questions from in the room? We'll move to the last one. We covered that one already. You address what -- yes, do you address that one already, excuse me? Okay. Well, I think that wraps up the online questions then. If there are no questions from the floor. Go ahead, Nathan.

And I guess you've come out this typically aggressive fashion like you normally do with decommissioning or other things or issues people have had with the company or questions we've had. How much interaction has just been an interactive process with your investor base. So is this exactly what we've been asking for? Or is it more? Or is it less? Or how would you characterize what you're delivering today roughly the conversations you've had with investors?

Well, I mean, first and foremost, this is stuff that we were going to do. A lot of this stuff we're already doing or going to do regardless. But I would say that based on the conversations that I've had with investors over the last month, that this is right at the outlay of what they would expect. And maybe there's an investor in the room. I don't know if there's a couple, I think. But I think that being aggressive, setting goals, having a plan to hit those goals, if we moved up our date on the carbon neutrality, not because it just seems right because we think we can get there. I think this is exactly what the investors should want to hear. I should want to see. It puts to bed a lot of the things that may or may not be out there. For example, EPA. We don't care. We're going to do it, and we're going to meet or exceed the EPA framework regardless of what that framework is. So that should be off the table. Whatever the measurements are, whatever the regulations are, whatever the legislation is, whatever, we don't care. We're going to do and we're going to implement our plan and it will have success, which will then drive all the other things.

And then back to my differentiation theme, I will tell you that this company is way ahead of most of the producers in this country. And I didn't mention it earlier, but even on the TCFD journey, most companies in this country haven't even started on it. So I think it's, again, in that theme that has been really the history of the company, I think that differentiation is critical.

[indiscernible] the slides mentioned blue hydrogen as an opportunity. The blue hydrogen case off in the U.S., would you consider retaining undeveloped acreage and taking it into production.

So undeveloped [indiscernible] whether it's for utilization for natural gas to be sold at natural gas or natural has to be used to create hydrogen that's utilizing that atleast. So we're all for -- We have had some discussions with some companies that are looking at a vertical integration model, where there is a consistent source of natural gas, but to build a plant to manufacture hydrogen and then the offtake of the hydrogen or by-product of the hydrogen manufacturing process, is carbon dioxide of which you would then sequester back into your existing infrastructure. And so those are the type of projects that we are looking at and evaluating. And yes, as we said, we are absolutely looking -- we'll look at the re-purposing of our assets to help hydrogen become an affordable energy source. We've got the infrastructure. We've got the internal expertise. We have the assets. We have the people. We have the capital. And so we'll be, as Rusty mentioned, we're in a unique position to help lead the energy transition. This will be a part of it.

And not just low hydrogen, but you can repurpose our assets for things like carbon sequestration and those kind of things. We're going to be in we run the business -- it's a business, and we're going to do what's the most profitable and what's best for the assets we have.

All right. Well, that takes care of the Q&A for session 1. We'll take a 15-minute break. And for those outside of the Houston area, we're finishing at -- we'll be back here at 10:30 local Houston Time. [indiscernible] [Break]

[Audio Gap] number one priority for our company is safety. And what we say is safety, no compromises. And in fact, we -- if you've seen any of our sustainability reporting in our annual report, you saw last year a diversified challenge coin. And so all of our employees have their challenge coin with them. And it lists our 4 daily priorities: safety, production -- even our Board member, Mr. Turner, safety, production, efficiency and enjoyment. And so Paul is going to kick us off on this portion of our program talking about safety.

Just like with emissions, you need to build a strong baseline. The same is true for safety. We've got to build an extremely strong foundation to build proper strong culture. As a growing company, we've done a lot to build that foundation to keep safety front of mind. All of us every day do a lot of things. We know to be safe, but we don't always keep it front of mind. So our focus has been one where we're doing everything we can to keep safety front of mind, We've coined that term be where your boots are, which was a suggestion by some of our field folks about how do they stay present to their jobs at hand so that they can be safe. And that is a saying that does not go away Diversified at all. But also you've got to have really good analytics to understand the causes of when incidents do occur and what can be done about it. So we've built a very strong internal dashboard that allows us to drill down and learn from our incidents in a very powerful way. So we know where to place an emphasis program. At the same time, again, trying to keep things front of mind, we've done quite a lot, some different things. And the feedback, most importantly, the audience that we're sending us to has said some really positive things about that content and the meaningfulness of it. So just real quick, we have DGO safety minutes. There's a series where we just give 1 minute on a topic to inform people. We have the DGO environmental minute. You saw the first one of that, and it's a series of keeping all things environmental in focus. We have a newsletter that comes out, Monthly Safety Fast Facts. This is for off the job just as much as it is on the job. I don't know anyone who can flip a switch. I can come watch you mow your lawn. I know how safe you are in reality. And also, one of the most popular things we've heard from the field is our podcast, Walk the Talk. We have guest members from field operations give us their philosophy on safety, what's important about safety, and it's become quite entertaining. I think I've heard from a lot of our operators that as soon as they get at that minute, they take the 5 minutes it takes to listen to it. And we've made a very prominent video channel in our Internet, so all of our content is there. Essentially, what I'm saying is that safety is a priority. Our target is zero incidents. We're going to perform that by having excellent learning, excellent communication and the results are going to follow. So that is our goal. It always will be zero incidents.

Thank you, Paul. Well, I truly have what I think is one of the best jobs in America. I get the work with this tremendously talented people that are dedicated to produce great results but also just a joy to work with. So -- and of course, we always have to ensure that we recognize CEO, Rusty Hutson and what a privilege it is to work with him. ESG is not just our great environmental story that we were pleased to share with you earlier but we also have a great or social story to share. And for our social portion of the program, I'm pleased to introduce Mark Kirkendall, our Senior Vice President of Human Resources; and Laurie Knox, our Human Resources business partner in our Southern Appalachia operations. Both Mark and Laurie are outstanding professionals, and they have been instrumental in guiding and shepherding the growth of our employees over the last 3 years. And when I started with Diversified, we had 80 employees 5 -- 5.5 years, 5-or-so years ago. And now we have over 1,300 and both Laurie and Mark have been very instrumental in helping lead that effort. So they've got some encouraging information to share with you. Mark and Laurie?

Welcome back from break. I didn't see a lot of chocolate out there. So if you didn't get enough, for sure, we'll try to keep you moving. I did ask them to turn the air down a little bit for you all. But thank you for being here. I think one of the things that Laurie and I are pleased to be able to do, and Brad says it's a lot is that you're either in production at Diversified or you're in production support. Well, Laurie, and I clearly are in production support, support of our employees. And we view our jobs as customer service jobs. We're here to help our employees every day, to help them do their jobs. As you've heard, we put a lot on their backs. We count on them. We trust them. They're real professionals, and we get the honor of working with them. Laurie is 1 of 3 HR business partners we have. We also have an HR business partner in our Northern division. Her name is Lindsay Gmutza. And then we have an HR business partner in our new Central division, Amy Harman. And then I have 2 people in the corporate office. We have a talent acquisition manager, Katie Campbell, and we have a Benefit and Compensation Manager, Alana Ford. And amongst the 6 of us, and we have a couple of support positions. We help support our workforce. I'm going to talk a little bit about the workforce now. One of the things, obviously, is an investment in the people we have. We invest in our people with above-market compensation packages that are almost -- I think it's 1.5 -- almost 2x the average income in the states we operate in. So we pay well. We pay very well -- very good benefits. We pay 100% of the employee premium for their health insurance. The employees do pay a small percentage of premium if they want to add dependent coverage, and that's unique in the industry that we're still paying 100% of employee health care. We also have a very robust 401(k) platform. We match the employee's deferral up to 7% of their income dollar for dollar -- their deferral, I'm sorry, dollar for dollar. And on average, this year, we'll end the year where every dollar an employee contributes. Diversified contributes about $0.81, so it's a great savings program for their retirement. I think that's important because, as Paul said, be where your boots are. Be where your boots are is about focusing on what you're supposed to be doing in the moment you're doing it. And when you're paying people well, they have good benefits, they have good jobs in their community, they're not bringing those issues to work. They can be where their boots are. I know that sounds simplistic, but that's what we want. We want our people to come go home the same way they came to work, as Brad often says, hopefully tired, more tired, but we want them to go home the same way they came to work back to their families. And being able to pay good salaries, good benefits allows them to focus on the work. We also provide educational assistance for individuals that want to return to school, get additional training. The company supports industry associations. Many of the executives are on different associations around the country. And we also do industry training, we'll help. I think what may be lost and what diversified has done over the last 4, 4.5 years is we often in the investment package. You see the acquisitions and the productivity that has been put under that umbrella of Diversified. At the same time, I think this chart shows that the staffing has been done the same way. It has been a strategic operation of Diversified to bring on the employees that know the assets we're purchasing. That's huge and that they're coming to us with the knowledge. I think you'll hear from our production employees, you've heard from Brad and others that we look to them to ask them to tell us how they do the job they've been doing, how can you do it better and how can we support you in doing it better. So that graph on the top right there shows most of our employees have come on through acquisition. We do have almost 1,300 employees now. We experienced right around -- this will be our third straight year with about 10% turnover, which I know we're all reading about how the age of people quitting their jobs and not returning to it, we don't have that issue. Our people like their jobs, they come to work. We have, like I said, about 10% of turnover. So that still means we're recruiting for about 130 positions a year, 1,300 jobs, 10% turnover. So when we do recruit, we want to be specific in how we're tracking our efforts. In this year, 2021, we launched an applicant tracking system, which enables us to track where candidates are coming from and the diversity of those candidates. We didn't have that ability before. So we get, as Teresa said, monitor, improve, try to get better. One of the things we learned this year early learning, but in the bottom left, you'll see there, about 10% of the applicants so far this year were female candidates -- the report of how many -- what percentage of candidates did we hire, and it was 20% of the candidates we hired during that same period were female candidates. So that shows that we're making good effort. At the same time, we fell a little bit short on diversity. So what we did is we found 9 markets where we have diverse communities that we already operate in. As part of the issue is that it's hard to attract diversity to communities that aren't diverse in many of the places we operate aren't. But we did identify that the 8 -- the 9 markets where we have the most diversity, and we've engaged a third party that helps us reach out to diverse employment opportunity, agencies in those communities so we can improve our talent base. The other thing the applicant tracking system did was enable our transparency for our internal employees. That gives them opportunities to look at career growth positions that they might be interested within their department, outside their department or as we grow our footprint around the country. And we have moved individuals from the Appalachian Basin to the new Central area. And then the last one is we have taken an effort, our talent acquisition manager, I mentioned, Katie Campbell. Katie was certified this year by Cornell University and by the University of South Florida and the diversity and inclusion efforts company-wide. She is our talent acquisition person. So a great place to start with her getting those certifications. I'm really excited, and I didn't even have to put notes on my piece of paper for this next slide because I'm just really -- we talked about the -- I've heard everybody use the word culture, culture wins from Brad, culture from Paul and Sandy and I've talked about culture. And we had a long discussion around, well, what do we want to define culture at. When I said to Sandy, we don't get to define it. We get to help set the guidelines for it and then our employees will define it for us. So I'm really excited to share this information. It was our first inaugural employee engagement survey. And first and foremost, out of the gate, first year we've ever done it, 82% participation, which is almost unheard of, partially because employees typically want to make sure they see how you're using the information before they fully trust you. So the fact that we got 82% was just -- we were just really pleased. And if you go down to the 5 categories that categorize how the survey came out, you'll see that there's a note next to it of the -- what the benchmark was. This was over 520 companies. The survey was done throughout over 35,000 surveys, and that's where the benchmark data came from. I'm excited to say that the things that we are going to trust the foundation for change to are our people and our managers. That's what -- those were our 2 highest rated scores. So as we go to make action plans and decide how we're going to react to this information, we have a great foundation to make that change. Our employees like their jobs. They like what they do. They feel appreciated. They like their coworkers and they like their manager. I mean what a better foundation to start with. Now what they sometimes don't have as much personal relationship to is that corporate office in Birmingham. And when you don't have the personal relationship, everything you're uncomfortable with must be the boss, right? So that allow us -- we just missed the benchmark by 1 point on organization, but we know what we need to do about that. We've created a cross-functional team made up of mid-level managers from around the country that are working with me to come up with action plans how we're going to address the survey. We've started handing out the actual surveys. Every manager that had more than 5 survey results back will get their individual survey to say where they match up with the company. So really excited about this. And I think I've also back to that other chart of all the different employees that came from all these different companies, they all had their own culture. And we talk about all the time internally One DGOC, One DGOC. We weren't really sure we had done that. Do we have -- do our people believe that are part of one company. And this was great information. So you can see I'm excited about it. If you want to ask me about it later on I'll be here. And then lastly, our investment for me, and I'll turn it over to Laurie, our investment and our future leaders. We put together a professional development program of 14 mid-level managers from all over the country. Diversity -- different covers every department in the company. They meet 4 times a year. They meet with Sandy. Every time they meet, the goal of the group is to have interaction with the Board so that the Board has understanding of how the employees view feedback and opinion. They also have projects they work on. They had 2 projects this year that they've just finalized, and I'm going to let Laurie talk a little bit about the results of their efforts and the presentation they've made to our leadership team but one was to improve internal communication and one was to improve community outreach. And so this group has really been instrumental in helping us put those plans together.

Good morning, everyone. I'm going to talk about investing in our future leaders and our community, just like the last slide talked about future leaders at home. And to that end, Diversified has established scholarship at 3 schools, Indiana University of Pennsylvania, Marietta College in Ohio and Fairmont State University in West Virginia. And the scholarships are available for rising seniors who are pursuing degrees in disciplines that are related to our industry. And as you can imagine, receiving assistance for higher education is a huge positive for the individual and, by extension, to the community as well. But also consider that scholarship programs like this or a program like this teaches philanthropy. And so there may be a recipient who, down the road, has an opportunity to give back as they become a leader in an organization, may establish a scholarship program such as this and pay it forward, so to speak, in the future when they're able to. The summer of 2021 saw our inaugural program for internships at Diversified gas and oil. We hosted 6 interns and they worked in various areas of our company: midstream and upstream operations, reservoir engineering, marketing and legal. And the program provided Diversified leaders the opportunity to be mentors, to pass along industry knowledge and insights to the students. And in turn, the students brought a new perspective or fresh eyes, if you will, to our business. And they also can be a pipeline of candidates for future job openings as well. At the end of the internship program, each of the participants gave a presentation about their program, what they had learned during the summer. And I had the opportunity to sit in on a number of those presentations. And I cannot tell you how impressed I was with the enthusiasm, the engagement and how much they learned during their time with us. It was absolutely gratifying. We feel that this program -- this first program was a big success. And I'm very happy to announce that we are going to double the number of interns for next year. So in year 2022, we're going to double the number of interns that we're going to invite to join Diversified in the summer. Diversified believes in giving back to the community. It's the right thing to do and lines up with our business values. And by virtue of the fact that we operate in communities means that we are able to provide hundreds of good paying jobs. We contribute to the tax base. And we are another source of revenue that is funneled into our community, but we don't just operate in those communities. We live there as well. And Mark mentioned that the professional development team has been working on a program, and that is to establish a company-wide community engagement program for our company. They'll focus on community relations, employee volunteerism as well as charitable donation match. And I wish you could see when our employees have an opportunity to donate or participate in a community event, the response that we get, I mean, it is -- I mean, they jump in with both feet and it is all hands on deck, and it's just really something to see. So also, I'm very excited to announce that, beginning in 2022, Diversified will commit up to $2 million for community outreach and support programs. So we're very excited about that, and it's a very worthwhile cause. Thank you.

Thank you, Mark, and Laurie. As I mentioned, not only a great E but a great S. And I'd like to introduce Ben Sullivan, so E, S and G. And we believe we have a great governance story to share. Ben Sullivan is our Executive Vice President and General Counsel, and he'll discuss some highlights of our approach to transparent corporate governance. Ben is a tremendously talented attorney, and is involved with all aspects of our corporate activity as well as being a great M&A attorney, which as you guys know, is very helpful and diversified. So Ben, to you.

All right. Thank you, Brad. Happy to be here today. Any time I get to speak in public being the attorney, I'm pretty excited. So I appreciate getting the chance to see some old friends today and both here in the room, and I know we have a lot of friends online as well. So thank you. Thank you all. So I'll spend just a few minutes today. Governance doesn't sound sexy, but it really underpins who we are and it's a very critical piece of the compliance picture of the company. So what I'd like to do, why don't we start with where we are today. But to understand where we are today from a diversity standpoint and a Board independence standpoint, I'd like to take a step back and let you know where we were just 2, 2.5 years ago. So 2 years ago, coming out of the IPO a few years before that, our Board was 100% male and about 30% independent. And I'm pleased to report that today, through the good efforts of our Board, Chairman of our Nominations Committee, Mr. Martin Thomas, and the Chairman of the Board, David Johnson, as well as Rusty, we have increased our diversity and independence exponentially at the Board level. So right now, we are at 62% independent and that number will actually go to 75% independents on the Board by the end of 2022, due to a change in Martin Thomas' status. And we are at more than 37% diverse -- female diversity on the board at this time. And when you look at 37%, 37.5%, female diversity, that actually puts us in the top 30% of the Hampton Alexander review panel in the U.K. for diversity's report on FTSE 250 companies. So we're in the top 30%, which is absolutely something that we're super excited about. So we've gone over the last 2 years on this journey to add diversity and independence to the Board, but we haven't just added to app. You've met today Sandy Stash, Sylvia Kerrigan here, Melanie Little. Melanie Little, our other Independent Director, is tuned in. We've added accomplished women who bring leadership and wisdom and skill set to the Board that we value greatly. So to that end, you can see, and I won't dwell on it, we have gender diversity. We have tenure diversity, age diversity and skill diversity as well, and we're not going to stop here. We have a bias for action. Next slide, I'll give you a little bit of an overview about how the company is organized, kind of the underpinnings of the structure. So you see, we, of course, have our Board at the top. You've met a couple of our Board members today. I'm really pleased to report that the Board is super engaged. So the Board meets between, say, 10 to 12 times a year. And we almost always have 100% participation attendance by the Board, pretty much always 100% participation. The Board is involved. The Board is engaged. They ask probing questions. They set the strategy for the company, and they're not afraid of healthy conflict and dialogue, which I've been pleased to see. So under the Board, we have the committees. We have Remuneration, Audit and Risk, Safety and Sustainability as well as the Nomination Committee. These committees are all super active. They meet between 4 and 8 times a year. And we always, just about always, have 100% attendance at those committee meetings. Then under the committees, we have Mr. Hutson, of course, our CEO. I'll tell you, and I know this comes through, and those of you who know Rusty personally know this about him, and he hit upon it earlier today, he has a vision for the company. And he has a splendid ability and I've been in the industry for about 2 decades now, he has a splendid ability to look at opportunity but not just see it but seize on it and/or sees it. And you see with a lot of chief executives, the ability to see opportunity or the ability to execute, Rusty has both, and that's really driven us. And the point of bringing that up is when you hear him talk about ESG and environmental leadership, he absolutely has a track record of achieving and succeeding when he sets these goals. So super excited to have that vision for ESG right at the top of the company. You've met Mr. Gray our Chief Operating Officer. Rusty has a couple of direct reports under him. Brad, and I'll give a very brief overview of which each -- which area each of these individuals has oversight of. Brad has operational. He also have human resources, IT, HR and sustainability. Eric Williams, who most of you know, just a fabulous CFO, has oversight of our financial groups, accounting, treasury, reporting and IR. And I'll tell you this, when you look at -- and Rusty and Brad are the same. But when you look at Eric's commitment, we think about finances at the company on a daily basis, his commitment, and you'll see this from Eric when he gets up here, his commitment to ethics and transparency with the investors, with the analysts: one, it's super comforting to me as General Counsel, the guy that's monitoring compliance and governance; and 2, it shows the company's strong commitment, not just corporate commitment but personal commitment to ethics and compliance. We have Jim Rode, our Chief Commercial Officer. Jim is in charge of a business development group. And as you know, we're a super acquisitive business. So Jim's group, along with his marketing group, are working hand-in-hand with Rusty and the other executives to execute on the vision and the goals. And then last, you have me on the General Counsel, had legal land. You saw our acreage position a lot to do on the land front, a lot to optimize on the noncore acreage side, as well as our compliance and policy engagement efforts. So you can see there's the structure a couple of our ongoing compliance monitoring activities. I won't go through all of them. I'll mention just a few, and I've said this before, the execs will get tired, probably are tired of hearing me say this, we have a monthly roundtable with our advisers. So that's our external U.K. counsel, external U.S. counsel, our brokers, our auditors, our external corporate secretary on a monthly basis that Eric and I lead. I have a lot -- too many business meetings. I mean it's just incredible how many meetings we all have. That is the one regular meeting that I have on a monthly basis that adds the most value. And I would say the same probably for Eric. It makes sure we're on track, when you think about governance and compliance, with hitting the reporting deadlines, making sure we're in compliance with disclosures, making sure that we understand what trading rules may be in place. So very, very important compliance monitoring activity. We do Board training on a biannual basis. Frankly, it's probably more frequent than that. The other important piece you think about compliance, how do you comply if you don't know that there's a new rule or a new regulation. The legal department, on a quarterly basis, works with Paul's group and other groups in the company to issue a quarterly report to the functional managers, setting forth the new rules and regulations that we need to follow and what we need to be thinking about. So again, it's not super exciting, but it's super important to ensure compliance. Spoken about some of the advisers we have, let's see. And then lastly, the last point I'll make on this slide, and if you haven't read it, it seems rather dull when I mentioned it, but there have been a number of studies about the important of checklist -- the importance of checklists. And you look at if you just Google checklist for surgeons, checklist for airline pilots, there have been studies showing, and sure, you want your surgeon to understand exactly what needs to be done, but we have a checklists in the company. And the checklister design, just like airline pilot, a surgeon, they're designed to make sure our team members know what's expected of them. We look at our committees. We have committee charters. Are we hitting those rules that we need to hit? Are we hitting the mark? So we've implemented a number of tech lifts and charters to ensure we're in compliance. All right, governance policies. The message of this slide, just a continuation of the slide before. We have a number of policies. They're not all listed here. We have a shared dealing code. Very important, making sure that we understand who can trade, when they can trade. We have an electronic tracking system, any insider, any time of the year, open period, close period comes to me as the Chief Compliance Officer for the dealing code and make sure that they're cleared the trade. So no trade, buy or sell is approved without going through a review process. All right. We have an anti-bribery policy. We have just like we have a zero tolerance policy for methane and emissions, certainly a zero tolerance policy for bribery, corruption, human rights, abuses and modern slavery. We have a whistleblowing policy. So we've implemented an internal whistleblowing hotline. A party can file anonymously where they can use their name and submit a whistle-blowing allegation. That system is managed by a third-party vendor. Any of the intakes come directly to me as the General Counsel and to Mr. Turner, our Senior Independent Director and Chairman of the Audit Committee. So we always know what's coming in, promptly report that to the Board. And to the extent that there are any allegations that require remediation or investigation, they're promptly handled along with the HR team. Next, we have an EHS policy. You've heard Paul -- about our commitment and adherence to safety rules and environmental and health rules as well. And then lastly, something that's important to me, super important to Rusty and Brad and Sandy. We are going to be going through over the next year, a revamp or refresh of our corporate policies, and we're going to be rolling out a few new policies. The one that's super exciting for me and those guys is the climate policy, which we're working on and we'll be putting out in mid-2022. As we see, the lawyer doesn't get too many slides. There's a theme here. Last week, we have a slide talking about our engagement with regulators. And you've heard Rusty say this. He's very good at this. Brad is very good at this. Eric's very good at this. And it's simply this, if you want to have a good relationship with your investors, with your regulators, you have to do 2 things. One, you have to follow the rules, so I've talked about how do you know what the rules are and making sure we follow the rules and 2, set a goal and meet it or beat it. And that's what we do. That's what Rusty has done from day 1 with this company, and that's what we do with our regulators. We set goals, we interact with the regulators, and we meet or we beat those goals. The regulators know and we deal with regulators at the local level, conservation districts, state-level DEPs, divisions of natural resources as well as the EPA, the Department of Labor at the national level. The regulators know if they come to us with a concern, a question, we're going to take it in responsibly. We're going to figure out what the issue is, if there's an issue and respond and mitigate it quickly. So that's super important. We have a good relationship with the regulators, and that's because we do what we say we're going to do. And if they have a question, we respond quickly and proactively. Last piece I'll mention, participation with industry associations. So we are involved with a number of different associations. Right now, you can see on the screen primarily Appalachian-based industry associations. But we also have, as we push into the central area, partnership with the Louisiana Oil & Gas Association. We are in leadership roles in Appalachia in all of the big associations in Appalachia. And what that allows us to do is not waste a bunch of time in meetings and hanging out of cocktail parties. That covers 2 important things. One, it allows our experts, like Paul and his guys, to collaborate with their peers and other companies to make sure we understand what best practices are and hit them. And 2, it allows us to work with those peers on community engagement efforts. And you've heard Laurie talk about some of our goals. But if you put together our goals for the community engagement, along with our peers and these associations, it really has an exponential impact. It really grows the impact we can have on our communities. So with that, I will cede the floor, and appreciate the time to speak with you all today.

Thank you, Ben. We're going to transition now to an operational review. And so we are concluding, but I hope you have found to be a very informative, very specific, very comprehensive and robust discussion around our successes and our plans for all aspects of ESG. And so now we're excited to continue on to share with you more about our company, as Rusty mentioned, in some of opening comments. And so I am going to introduce these gentlemen and then I'll give them the floor, and then I'll come sit by you, Mr. Barron for a little bit. But -- so we're going to talk about our upstream, midstream and marketing operations. And then I'll have a few comments to add in regards to our technology platform. Discussing our upstream operations is Bob Cayton. Bob is our Senior Vice President of Upstream. He's a 35-year plus natural gas industry veteran. He came to diversify through our Titan Energy acquisition, and he's been extremely instrumental in the success of our Smarter Asset Management program. And I'd like to describe Bobby as a production Guru. His understanding and our knowledge of wellbore production is impressive. To my right here is Maverick Bentley. Maverick is our Senior Vice President of our midstream operation. He also has over 35 years in the natural gas industry, and he came to us through our acquisition of EQT Southern Appalachia assets. Maverick has led our efforts in building our very expansive midstream operations in Kentucky, West Virginia, Tennessee and Virginia, and he's now leading our entire midstream business. Maverick, you may get -- you may see him blush here, but I described Maverick as the Tom Brady of midstream operations. His ability to manage through complex situations, maybe not in 2 seconds but pretty close, is extremely impressive. And then finally, discussing our marketing business will be Ron Ridgway and Austin McDaniel. Ron is a 30-year veteran of natural gas and natural gas liquids marketing. He joined us in early 2021 after a multi-decade career with Dominion Transmission. Ron has tremendous skills and he's doing an outstanding work leading our high-growth marketing business. With Ron, again, is Austin McDaniel. Austin comes to diversified with our acquisition of the marketing company, Mid-Atlantic Energy, where Austin was a founding member and a co-owner. Austin leads our producer services business and manages our third-party midstream business. In addition to being a pilot and accomplished runner, Austin is definitely a leader in our top 40 under 40. But before these gentlemen start, both Ron and Austin, they report to Jim Rode, our Chief Commercial Officer. And you probably picked up on the fact that I have nicknames for a lot of the people in our company. And for Mr. Rode, he's affectionally known as the GOAT, the greatest of all times, and we're glad to have him on our team, and he's done a great job leading these operations. So Bob, going to get us started.

All right. Thanks, Brad. Go ahead and go to the next slide here, we want to -- yes. Okay. You know I don't do this, Mike, so you have to bear with me. I hear a lot about our culture and what makes us different and people are always asking that. We have a culture of people who care and want to be the best at what they do. So how do you teach them that culture? Well, ownership, we teach ownership, and we empower employees to let them be able to make decisions and to move us forward. We teach accountability, we set plans and we follow-up on them. Data and human interaction, which equals action for us, we conduct well reviews on individual wells that we acquire, develop plans and then we get to the well and execute on that. Development, we develop skills and knowledge for our teams to succeed. We've been very successful of having people that we've developed in-house to be able to take on expanded roles, and that's very important to us. When we do acquisitions, one of the first things I tell people of the new companies, as employees here, you're not only allowed to think but now you're required to because we want that input. We're not a company that we make -- I make sure from my background, I came from the bottom up. We're -- we all have different tables but nobody is any better than anyone else. And so we include them in our family. We look at each well as its own business model. And we challenge employees how they can extract more value out of every well. This next slide will kind of give you an idea of where we operate. We'll point out a few differences there. Our production operations by region, we have a line of business focus with geographic accountability, and we spread our diversified culture across that whole footprint. We don't operate in silos. Everybody as you can probably tell from the teams has been up here today, anybody that needs help, we reach out to each other the same way with the employees. The other thing is we try to be consistent across our whole footprint. The way we operate in our Appalachian area is what we're going to spread to our Central area. People know the model, and it's repeatable and scalable. The upstream smarter asset management, you guys hear a lot about that, it's -- some people say, well, what is it, where do you find it. It's actually that -- it's not something you tangible, you put your hands on in every case. More so, it's a culture that we build, having our employees take responsibility for their assets. Our SAM initiatives are designed to detect or eliminate emissions also while simultaneously ensuring equipment integrity and operability. When -- as regulations change, which, in my career, they have changed several times and what's acceptable becomes unacceptable or just it's the way it's viewed, our employees have always been able, through my career, to step up and make these changes because this is what they do for a living. They're professionals, and they have to adapt. And with the world that we're in now, it's not only will we adopt, we'll succeed. We're going to be the best there is at greenhouse gas and ESG. Our goal when we sat down with our employees, we developed goals, which is improve safety, optimize production, increase expense efficiency, improve emissions profiles. So we talk about those open and candidly with them. Then we develop a process of how are we going to achieve that goal. And we do that by back to the data and human interaction philosophy, coupled with our field data capture application that we use in the field to drive well activities, process enhancements and refine best practice techniques. The result of that is a practical profit-focused solution developed by experienced teams. The other thing that makes us different is when you hear a status quo, you won't hear Diversified in that sentence. We challenge them to do make their own mind up. Don't do things the way that -- one of the phrases we don't foster is, well, we do it this way because this is the way I've always done it. We make the decision on how is the best way to do it. How would you do it if you were making that decision? So some of the examples of things that we do, when you're producing gas wells, you're always going to have the most production by reducing the bottom hole pressure as low as possible. And that's impacted by fluid buildup in the wellbore. We have a swabbing program in areas that don't have tubulars to remove that weight. In other areas, we use rod pumps or plunger lifts. Then we also use wellhead optimization, which is making sure we have the right controls on the right wells. There's no need to have 10,000 controllers on a well that may only need one. We have to be efficient, use the right tool for the right job. As Maverick is going to speak to here shortly, compression is the other part of that. We work closely every day side by side. I'd get it out of the ground. He gets it to where we get the money for it. So that's the process of the smarter well management. How does that look across our whole portfolio? It's like you have Appalachian wells and now you have Barnett wells. So how can you apply that? Well, all those same principles apply across the board. Universally, we want to return or shut-in wells to production. In a lot of cases, we paid $0 for those wells. We install our optimal artificial lift equipment, complete workovers with accelerated payback periods, typically 90- to 120-day payback periods. So we're getting our money back fast moving on to the next project, and that's constantly being powered. We review vendor spend for scale opportunities. The size we are now, we try to create a customer vendor relationship, not a relationship where we're separate, but we're joined at the hip because we're impacting each other's business. And we're at the scale where we can definitely affect their bottom line also. Small savings, small big express equal big wins due to our size. So we don't leave out in detail when we're looking at cost savings. In Appalachia, we swab wells, like I said, to relieve the pressure, quick returns, reset tubing depths to -- for better fluid removal for lower bottom hole pressure, repair production pipelines to ensure every unit is delivered to the sales meters and reduce greenhouse gas, which is the big focus. If we're leaking gas out of the pipeline, it's not getting to the sales point. And that's something that we want every unit counts. We have to get every unit to the meter. In our Central region, we had well compression. We've optimized the contractor expense to drive improved productivity and profitability and partner with third-party midstream operators to lower line pressure. And again, back in the Central. And again, the universal things apply. We're returning idle wells back to production. So heard about all that in a very short time, but what does that look like on a day-to-day basis? And what are some examples of that? Our Indigo acquisition, when we got it, one of the first things we did was we review those wells, look at wells that were performing, look at the wells that were shut in. We found quite a few wells that were not in production. When we've asked the question, why, it was because, well, we got them that way and nobody said to do anything. So if we start looking through those wells to see can we get those wells back into production -- well, I'm happy to report, since the acquisition, we've got 60 wells back in production, and we've produced about 325 million cubic feet of gas out of those shut-in wells. All of this, counting the equipment we put on the wells and the water hauling, is still coming in at less than $1 Mcf to produce that gas. So very attractive. In Pennsylvania, one of our acquisitions there, we had some wells the previous operator, the wells were shut in. It was due to a fluid condition in the pipeline. The pipeline company shut the operator off, said they couldn't produce the wells. They thought it was -- I think it was called [ crack on and therm ]. I think it was the term, but I never heard of it. So I didn't buy it. We were like, let's get a look at this. So long story short, we were able to put some additional equipment on there, return those wells to production, and they've been producing about 5 million cubic feet a day in steady production. So a big win there. In Ohio, we've identified about 100 pumps -- that downhole rod pumps that weren't working. We prioritize those, put them on -- got them fixed. Because of the scale we did them at, we were able to R&R the rods and tubing, put those back in production for a little less than $8,000 a well. Payback period on those was about 2 months. And we continue to produce at 2 to 4 barrels a week of incremental oil from those wells and have a nice flat production profile from them. So we were -- we're very happy with those results. And Brad tells me when I get to talking about this kind of stuff, not to be too long winded because I don't like to talk like this about a lot of things. But when it comes to increasing production, I do like to talk about that. But -- so in a nutshell, we identify, research, plan and execute when we -- and this isn't a package of wells, this is by the well, by the individual well. And we solicit the input of the lease operator and value his input. And then we make a plan, and we go forward and execute on that plan. But in a nutshell, that's our smarter asset management plan. I appreciate everybody bearing with me. And thanks for joining today. I'd like to pass off to Maverick.

Thank you, Bobby. You didn't give Rusty credit for anything. So I'm going to, right out of the gate, I'm going to give him credit for my entire presentation.

I did do the pumping wells. [ The goddamned ones. ] So he was happy about it.

He was very happy to hear that you do like to talk about increasing production as well. So well, Good morning, and thank everyone for attending and showing interest in both our company and for me, the midstream operations. I am Maverick Bentley. I'm privileged to serve as a leader of our midstream operations and to support Bobby. Like Mark said earlier today, you're production or your production support. I feel that as the midstream operations management team, we are truly production support. I built a solid partnership and a friendship with Bobby over the past 4 years here at Diversified. If you think of the energy that Bobby produces as being the blood of our company, the pipelines, that's the arteries. The compressors, that's the heart. And all of those combined turns into the revenue stream, that's the true health of our entire company. So I'm pretty excited about being the heart of the company and makes us to start talking about some of the projects that we're a big part of. Our midstream operating philosophy is really very similar to what you've already heard about with Bobby. Even though the assets are different, the philosophy is sound and it's proven to give the results that we're looking for. Our field operations employees, they take ownership of every aspect of their job. And through our amazing acquisitions, by the way, thank you, Rusty, for all those acquisitions. So that's how that works, Bobby. Seriously, through those acquisitions, first and foremost, did consolidate what I always knew to be the best companies in the basin more so the most experienced and the most dedicated workforce in the history of this space now exists there. That's one of the keys to how we have been so successful. And you'll hear about that success a little later from a financial standpoint from Eric. Our frontline leaders and our managers hold our workforce accountable for high performance by establishing and executing on effective work plans. Regarding our version of data plus human interaction, Bobby said it best, it's action. We get to a site, we assess that site. We want to understand where are the room for improvements, the opportunities for improvements, and then we act. That's the key, acting. Another important part of our operating philosophy is our technical and industry training that we offer to all of our field employees. They are very technical in nature. This includes OEM training such as from one of our significant compressor engine manufacturers, Caterpillar. To be able to operate and maintain and troubleshoot and optimize that equipment, you have to have that level of training. It's a critical part of assuring that our compression equipment runs at those optimal conditions, reducing those overall emissions. That is key to us in everything we do and every day that we are out in field operations. Bottom line, our mentality is we get to the facility, we assess what's going on, and then we do something to improve it. Next, I'd like to share with you our midstream operations leadership structure. We've now launched a line of business focus where Bobby has taken on the upstream leadership management, I've taken on that same role in midstream. Bobby got clearly into his wheelhouse, being the production guru. I think I now got back and feel very comfortable being in my wheelhouse with much of those years of service being in that midstream model. As you can see, our midstream operations model is 2-pronged with a focus both on shared services, supporting the field operations process. We have 3 separate field operations footprint: Southern Appalachia, Northern Appalachia and our newly created Central Region. We support all 3 of those operating regions with a robust level of shared services support, including facility and pipeline construction, regulatory compliance, and our gas control center located in Charleston, West Virginia. As you can see from the summaries between the 2 basins, the overwhelming majority of those assets are located in the Appalachian Basin. We acquired those significant facilities through the acquisitions of EQT, Core Appalachia, Dominion Gathering, Equitrans and [ Carbon Energy ]. We've been able to leverage many, many efficiency by combining all of those acquisitions under 1 ownership and 1 leadership model. One item to point out, while there's not a significant amount of pipeline mileage in the Central region, we do have a significant amount of horsepower of compression there. And we've already begun identifying significant efficiency opportunities in that central region. And we'll talk about one of those in particular, just in a few more minutes. As you can see from the geographical overview, Kentucky and West Virginia represent a significant portion of our midstream assets. Most of the employees and that associated equipment is in Eastern Kentucky and across the West Virginia footprint. I, myself, born and raised in Eastern Kentucky, and I live there. I also have an affiliation with the UK. But that is the University of Kentucky. So we'll say, [ once they go walking, so. ] The acquisition of both those producing wells, along with those midstream assets, in that basin has proved to be, I believe, one of our most strongest foundations in how we've created that value back to the shareholders. By owning and operating these midstream facilities, we've been able to effectively manage downtime and move our production volumes to multiple outlets to mitigate external curtailments. And of late, that's been more of a challenge than you might imagine. Without that multiple outlet opportunity, we would not be able to achieve the goals that we've set forth every day. In addition to mitigating those curtailments, we're also connected to several different major pipeline interconnect systems, and we're able to optimize the sales of our production volumes to the best available pipeline market. And we'll talk about 1 project in particular that really gave us a great opportunity in just another slide or 2. Another significant advantage of owning our own midstream facilities in the basin is that we can generate third-party gathering revenues from those. And Austin will -- and Ron will talk a little bit more about that process. Not only are we generating revenue -- in the reverse, we're not paying someone else to gather our gas volumes. Again, I think that's just one of the underlying themes of why we're so successful. As we approach our midstream operations with a smarter asset management focus, our goal is, first and foremost, improved safety. That's always our top priority. Optimize production sales. That's where I step in and on production support to Bobby and his team, take it to the best price market, continually look for ways to lower operating expenses and improve our overall emissions profile all the while running our business. It's now part of running our business. Our process to accomplish this goal is built around our data plus our human interaction mindset, coupled with our technology systems to drive consistency and efficiency in every task we perform. We identify and then standardize on those best practices, across our entire footprint to achieve that high level of performance. Some of the ongoing initiatives include compression optimization, which directly supports our emissions reductions. And again, we'll have another slide to talk about one of the most significant ones of that. Simplifying operations, equipment rationalization, making sure we're maximizing the capabilities of the midstream facilities that we do own and operate. Most important part of Smarter Asset Management philosophy is that we never accept that status quo. We're always challenging our teams to look for the better way to do it, the more innovative way to do it, the smarter way to do it. We all came from very significant and very disciplined companies before. And they gave them a significant advantage in many ways. But the 1 thing that it did mostly, especially to the field operations, was it hindered that you think at the boots on the ground level because when you work for a multibillion-dollar corporation you're told what to do, what frequency to do it, how to do it. Here, we turn it around. We're asking for that input from the ground up. And I think that status quo is just not part of who we are, ever. With our size and scale, along with the experience and the knowledge of the assets we now own, we've been able to identify and execute on many opportunities for production sales increases as well as improved expense management. One of these opportunities included adding compression at our Moonraker Pad in Ohio to stabilize and increase production due to higher downstream line pressures. We work with our third-party compressor vendor for operational flexibility to successfully mitigate those higher line pressure adverse impacts to our sales and increased production sales by 30%. Another significant accomplishment for our midstream operations in our facility and construction teams was the recent completion of our Bradley compressor pipeline in southern West Virginia. It allows us to reroute gas to a higher-margin market. I believe maybe one of the highest margin markets that we have available in the entire Appalachian Basin. This pipeline construction project was a significant achievement. It leveraged resources from every department within our company, EHS (sic) [ EH&S ], land, pipeline, construction, compression, regulatory compliance, our gas control, shared services. Most of all, it was a partnership with our energy marketing team to identify the opportunities and then build a pipeline to get the gas there. It effectively shows how well we work as a company across all sectors of our business. One of our most recent and impactful opportunities is at our Red Oak compressor facility in Louisiana. This location is our largest midstream facility in our new central region. We've already determined that we have 6 compressors there currently, 4 of which are owned, 2 were leased. We've determined that the 2 lease units were not required in order to still move all of the production volumes that we had. We were running all 6, but they were not loaded from a horsepower perspective to that maximum and optimum level. So we're in the process, as we speak, of sending those compressors back, saving $750,000 a year and reducing those emissions because big horsepower likes to run fully loaded. That's when it's most optimal from an emission standpoint. Other opportunities include rerouting gas to increase NGL production in the Appalachian Basin. Rerouting gas to further eliminate unneeded compression in our central region. Again, we're just now assessing and better understanding all of those opportunities, and we're already finding several opportunities that are going through a review to determine if there's a production impact. If not, then we're going to eliminate that compression and eliminate emissions and eliminate cost. Here's maybe the -- one of the most successful examples of Smarter Asset Management as it centers around compression elimination. We've successfully consolidated in our Appalachian Basin over those 4.5 years or thereabouts where we've been able to aggregate all of those assets under 1 footprint -- and through that effort, we've eliminated 21,000 horsepower of compression, a positive impact on annual emissions of 93,500 metric tons of CO2 equivalent and we generated $2 million of direct expense reduction in the process. So again, just 1 more example of how we can do both. We can efficiently and effectively run our business and reduce emissions. I'd like to thank everyone for your attention and the opportunity to share some of the exciting things that are going on with our midstream operations. I want to wrap up by saying that I'm proud to represent Diversified Energy here today. I'm proud to represent the hundreds of dedicated and just phenomenal field workers that are back home working every day right now today. I'm proud that they are representing our industry and providing the quality of life that we all get to enjoy. The energy that we produce, transport and deliver is fueling our nation. And I think we all should be proud of that. Thank you.

That's going to be tough to follow right there. Wow. I want a second. Give me a second. You guys -- you can hear the passion coming out of these 2 guys up here. We -- Austin and I work with these guys every day. The passion they bring to work every day and you can tell what they love to show up and get things done. But thank you, you guys did a great job. Yes. I do want to thank Mr. Rode. I report up to Jim. I know Brad missed it, too, but I call him a GOAT also, he's one of these guys I travel with. I feel like I'm traveling with Tom Brady because everybody wants his autograph. He knows everybody in the airport and the hotels, and it's just amazing. So -- and Brad, thank you for that introduction. And Rusty, thank you for everything that you do for me. Right. All right, good. All right. Diversified Energy Marketing. We refer to ourselves as DEM, which is Diversified's wholly owned marketing affiliate, which consists of a team of 20 folks, assembled through members coming on board through acquisitions as well as new hires that were targeted to fill key roles to support exponential growth. This team covers a broad set of day-to-day and strategic functions across the front, middle and back office as well as business development and market origination. In the 3 years since forming this marketing affiliate, we have grown in size to a top 25 marketer by volume in North America, which is very exciting. To support that growth, we've developed strong relationships with large creditworthy trading partners, including more than 100 NAESB contracts. We have a strong distribution of experience across the team, averaging 20 years with 5 members averaging over 30 years and a strong base of young, dedicated talent to keep pace with our growth into the future. This experience and deep understanding of the marketing operations side of the business is critical to our team's success given the unique scope of Diversified's assets spanning over 20 different pipeline markets. When you talk about marketing teams, they love assets, and Diversified has assets that's a marketers dream. We're moving over 1.2 Bcf of gas a day, over 640 gallons (sic) [ 640,000 gallons ] of NGL liquids per day and should I say growing, over the Central and Appalachian region. And with that said, I'm going to turn it over to that young dedicated talent over here, to Austin, who heads up our midstream business.

Thank you, Ron. So our third-party gathering and purchase business is currently moving 90,000 dekatherms a day of production, third-party producer gas. That's generating $22 million of additional revenue to our company. We have a strong midstream commercial team that has proven processes and systems in place to manage that aspect of our business and -- as it continues to grow. So when you think of marketing, where does it fit in the Diversified ecosystem? I like to think of us as a bridge between our production and midstream groups in the field and the market where the revenue is ultimately generated. With that, marketing teams are equipped with a multitude of tools that allow us to increase our netback price and generate more stable cash flows. And that's what marketing groups are about, generating or enhancing our margin. Diversified is going to continue to produce the volumes that we produce and then marketing attempts to increase price or reduce costs, helping that netback price. So our first priority by far is flow assurance, getting our gas to market, while navigating constraints and minimizing costs on third-party pipes. Also, we're trying to get index price or better, managing our physical position in the market, optimizing our firm transport and storage assets. And lastly, but not least importantly, providing accurate and timely data to our accounting and finance teams. From a data flow standpoint, marketing is the intersection between our field, measurement, accounting and finance groups. With that, we have to understand the life cycle of a dekatherm as it flows through our pipelines as well as digitally through our computer system so we can ultimately and accurately report on that. How do we bring value to the bottom line? Bringing marketing as a function in-house. We've removed the middleman, third-party marketers. These marketers generally like to create distortion and market pricing. Having this team and skill set in-house has removed this cloud from the room. In fact, the first RFP that our marketing group did with a packed -- medium-sized package of gas in the spring of 2019 generated an additional $1 million of revenue over the next 8 to 12 months. When you remove these third-party marketers from the equation, you're also removing the fees that they charge. We have cut our cost by millions per year. Additionally, consolidating our volumes and selling into liquid pools on nominations, we've increased our leverage with our counterparties. We've also decreased our payment terms to the NAESB standard, 25 days, on a majority of the gas that we sell into these pools. Additionally, we're keeping our acquisitions team up to date on market pricing and strategic knowledge, which is enhancing their ability to attract and acquire the best and most profitable upstream and midstream assets, thereby furthering our growth. Along with these direct financial benefits, our marketing affiliates strengthen our relationships with our trading partners, enhancing flexibility to our deal structures and creating origination opportunities over the long term. To summarize, our marketing group is enhancing our cost structure, generating efficiency and improving the bottom line. Peeling back a layer and looking at how our team manages our growing footprint and the unique aspects of both regions we're operating in. Our marketing group is managing 99% of Diversified's production, split into regional groups from a natural gas perspective, focused on Appalachia and Central with our Midstream and NGL team spanning both regions. Focused on Appalachia, our midstream asset truly is an anchor in our marketing strategy, giving us tremendous optionality and ability to maximize price and reduce cost. It is a spider web across the Appalachian markets and third-party pipelines, allowing us to take a macro look at the market and determine where best to direct buoyancy. And this is where we work very closely with Maverick and Bobby on where these opportunities exist. Additionally, as constraints develop on interstate pipelines, there are opportunities to utilize our midstream system to navigate these constraints, further reducing our need for FT and reducing the overall cost of getting our gas to market. Additionally, Diversified's expansive footprint and adjoining midstream system allows almost 20% of our Appalachian sales to occur directly off our systems to end users and LDCs in large industrials. These deals generally have premium pricing terms and obviously do not require third-party interstate FT requirements since it's directly off our system. The other 80% of our Appalachian gas is being sold into liquid markets and is anchored by that right-sized FT portfolio. As we've moved into the central region in 2021, we've been excited to gain this exposure to the Barnett, Cotton Valley and Haynesville basins. And with this expansion, we are benefiting from the strong basis differentials in the Gulf Coast markets that Rusty mentioned earlier. Principally, we're receiving Houston Ship Channel in this region, and it's enhancing our overall realized price. Along with that, it's lowering our portfolio risk and removing that concentrated Appalachian exposure that we previously bore. This is directly complementing our hedge policy through increased diversification and reduced volatility. We have a positive long-term outlook in this region attributed to export demand and the resurgence and popularity of the Haynesville Shale. Our NGL portfolio has enjoyed significant growth in 2021. We're producing over 19 million gallons per month and generating $25 million of unhedged revenue per month. Our NGL production originated in the Appalachian Basin, where some of the company's highest BTU gas is being processed. A majority of that processing is occurring at our largest facility that we interact with, MarkWest's Langley facility. At this facility, our contract also allows us to benefit from the third-party throughput in our Midstream that processes in this facility. We also get the NGL uplift from those volumes. The Appalachian region is currently producing about 9 million gallons per month. And with the 2021 Central Region acquisitions, Indigo, Tanos and Blackbeard, we have more than doubled our NGL production, adding that additional 10 million gallons. And that is being processed through an additional 9 facilities. The pricing on these contracts is based on Mont Belvieu non-TET, and it's enhanced our overall NGL composition with lower propane figures in the 23% to 32% range. Additionally, a major difference in these regions from an NGL perspective, Appalachia and Central, the Appalachian region, in general, lacks pipeline infrastructure to remove ethane. So as such, we don't have the option to recover the value of that purity product in this processing in Appalachia. To contrast that, in the central region, there is a vast network of pipelines that enable these processors to strip the ethane. As such, our processing agreements enable us to trigger a clause on a month-by-month basis that allows us to grab that purity product and capture that value. We do that, like I said, on a month-to-month basis, so our NGL team led by Ron and Mark Preisner back in the Richmond office, keep a keen eye on that frac spread between ethane and the value of the gas stream. At any point during the month prior to flow that we see that we want to capture that ethane value, they're able to trigger that and capture that purity product. Currently, where we're able, we are in rejection mode of ethane just based on current pricing. But if that changes, we have that option. Natural gas remains our fundamental commodity in our portfolio, but as Diversified continues to expand, and we've brought new NGL talent in-house, this is going to be a growing and more significant portion of what the marketing team is looking to further enhance margin.

In closing, then, now and the future. In the fall of 2018, the strategy to form a Diversified marketing affiliate was formed and executed upon. Prior to that Diversified with selling gas from 8, 9, 10 individual production entities using third-party marketing companies with fees, selling its gas at individual points and receiving the proceeds on 60- and even 90-day terms, a structure that would be tough or difficult to scale. With the formation of DEM, Diversified sells nearly all of its natural gas from 1 entity with an experienced in-house team, 80% of total sales are at liquid pools and on 25-day pay terms. This strategy has had a multimillion dollar benefit to Diversified to enhance pricing, reduce costs, reduce FT needs, improved cash flow and overall flexibility. Diversified has established a foundation for growth in our people, processes and systems. We continue to attract new skill sets, such as NGL marketing, that will allow our people to continue to extract additional value from Diversified's growing asset base, both today and into the future. As we look at where we've been and where we are now and the realized benefits we enjoy today, I'd also like to speak to the strategic opportunities we're focused on over the next 12 to 24 months horizon, which Austin has already hit on, but increase take-in-kind liquid contracts, increased gas sales to industrial, increase the third-party producer gas purchases, increased storage optimization and increased marketing fees. With these opportunities and the platform we have created, we're excited to continue marketing's role at Diversified: getting our gas to market and increasing margins through better pricing and reducing costs. Thank you.

I'm going to quickly hit on -- I want to point you to Page 90 in the deck, which is a highlight of our Information technology organization. We're pleased to have with us today David Myers, who's our Chief Information Officer. David is the architect of our IT strategy, our IT assets, which when we come in and turn the computers on every day, it just doesn't happen. And we've aggregated all these people, all these assets, all these systems, all these connections. And David has done an outstanding job of leading that effort. And we've established goal strategies and delivered some great results. But in the interest of time, I'm just going to refer you to that slide, and we would love to share with you more information about our technology operations and platform because just as you've seen throughout the day, we believe that we're industry-leading from a technology standpoint as well. And David has largely driven that effort. So with that, we'll turn it over to Mr. Williams for our finance update.

All right. Well, I thought I would say welcome, but I think I should say thanks for staying with us. It's been a lot to cover, and we'll try to be brief. You've gotten to hear from me often and my story, given the stability of our model, doesn't really change. You've probably sensed a bit of competitive tension amongst the team as we look for ways to make sure that Rusty gets the credit. So it's easy for me because I basically share an office with him as does Randy, as does John, because he spends a lot of time -- Sandy couldn't have said it better. This business really is run like a financial model. Rusty is close to the numbers as anyone I have ever seen. He stays very, very engaged with us as it relates to every aspect of the business and how we protect those cash flows that are so vital. So he gets credit for everything I do anyway. But I'm going to tell another story that I didn't expect to tell. But I thought that Brad's comments about Teresa were just so impactful. And I think it really emphasizes what we want to resonate with you today, which is just how seriously we take our commitment as it's my job to help fund the ESG initiatives that the teams walk through. And that -- you know Teresa Odom, most of you, from her role in Investor Relations. She joined us from Energen, having never done that role before and grew into it incredibly. But as ESG grew in significance, the amount of time that she was having to invest personally into both ESG and IR with just the help of one other incredibly talented professional, Wren Smith, who's in the room as well, helping make this happen, was becoming overwhelming. So I went to Rusty with the recommendation to try to get her some help and some relief. And I thought the answer would be, let's hire a second support staff to partner with her and he had a better idea. He said, we need to split Investor Relations and ESG to give ESG the attention that it deserves. And Teresa, who was really the architect of our initial ESG plan under the watchful eye of a Board that had established a committee dedicated to this, was the natural choice for that. So we approached her and we offered the opportunity to continue to lead both or to split that into the 2 functions and take her pick as to where she'd want to spend her time because she was so invaluable in both. And as you all well know, she chose ESG. But it really is about tone at the top. And I hope that what's resonated from the time here today is that this man sitting down here is very, very serious about the commitments that we're making. It is not, as Sandy said, messaging, it is about a culture of delivering results. And to follow marketing -- I spent a whole day with them last week going through the amazing things they're doing -- to hear Bob and Maverick present on what we do operationally, I hope that's really resonating through. So today, it wasn't just about going through the same story that you've heard several times before. Part of it was demonstrating to you the bench that we've put together and just the incredible talent that exists below the faces that you've seen many, many times. Rusty stood the business up 20 years ago and grew it over 15 years with a lot of labor, had Brad join us just before the IPO that partnered with him to begin that journey of accelerated growth. I joined shortly thereafter. But today, there's 1,300 people. And I hope that as you see the team, you're really getting a sense as to just how much talent there is on the bench and that you can feel very comfortable with the investment you've chosen to make in us. Also recognizing that we've got a few of our British friends and Scottish friends in the room. Many more who I hope are joining online. I feel the need to say you're welcome for the accent that Maverick and Bob both added, the Appalachian accent, because I know when I go to London, I'd love to hear the British accent. So that's doing our part. So I'll remind, as I transition into the financial slides that we intentionally tried to keep this section short, not because we've gone long and the finance guy is wondering if I'm paying by the minute for the webcast. But because the story is really consistent and has been. So we have a wealth of information on the website as it relates to the revenues that we generate, how we protect those, the diversification of our revenues with the midstream operations, our cost structure and how we look at our expenses. And what we do to architect a very safe, stable and unique balance sheet that's underpinned by 70% of debt that is amortizing. So you can see a glide path to that delevering over time. So I'd encourage you to look at all of that. But I'm going to start with a graph that you've seen or a graphic you've seen in those investor materials, but with a bit of a different twist. And that is, we've always talked about cash flow, and Rusty said it best: You don't have a business if you don't have cash flow. We run this business with a focus on cash flow. And the CFO that I used to work for would get up at this point and talk about, now I get to talk about how to pay for it. But Rusty makes my job easy because we generate a lot of cash. And so we get to have this conversation not from the standpoint of either or, we either distribute to our investors, we either pay down debt, we either reinvest into the business or we support our climate initiatives. I get to talk about both hands in that we generate significant amounts of free cash flow that allows us to do all of this. For them, it is that -- not just of our investors, and we appreciate each of you, but for the broader stakeholder group. I appreciate the presentation by Mark and Laurie earlier that went through the incredible team. So we have a large internal group of stakeholders; appreciate the bankers who are in the room and who lend us money to continue to grow the business. But certainly, the people who live in the communities where we live and work as well. And so you see an addition of a cash allocation to ESG. And that is $15 million as an incremental, an additional investment to, candidly, money that we've been spending since we began this journey that's couched under the context of Smarter Asset Management. We've always been doing these things. They're already part of our operating cost structure. We're just leaning forward and saying we're going to do more, and we're going to do it faster, and we're going to make that investment more conspicuous. And so the question came up earlier, how we think about this investment. And I think of it as an annual spend, and as we gain traction and we see the results that it delivers, we'll reevaluate what we need to continue to invest. But what's important is because of the way in which we built this operation, this amount of money can make a tremendous difference. But when you put it into context, it's less than 5% of the free cash flow that we generate. So it's not a significant proportion, but it will make a significant difference. And as technologies emerge, as new techniques emerge, we're going to be on the leading edge, and I hope you've seen that or heard that commitment come through. Because costs are so important, and we'll talk about our financial pillars here in a minute, we wanted to present just the context of how, again, we think about this $15 million. And it really is a portion now of just the way we operate. And so you've heard us talk about one of the key components of our cost structure being base LOE. That goes along with gathering and transportation and production taxes that we pay that total GAAP or IFRS LOE, but base LOE is the piece that we directly manage. It's the piece that Brad and his team actively seek to control. It's all the salaries and wages of the men and women who work for us. It's all of the Smarter Asset Management activities that go to make sure these assets produce responsibly for a very long time. And you see we're an extremely efficient organization. Our base LOE reported at the half year was just $0.46 per Mcfe or $2.76 per BOE. People ask why we talk in terms of BOE. My friends on the webcast will understand that, that's the terminology London really understands. This audience, we are a natural gas company, but we still -- BOE is most of what we talk about. But this additional commitment to ESG represents essentially a 15% increase in that base LOE, taking that from $0.40 -- I'm sorry, from $0.46 to $0.53. And importantly, not all of this will roll through the P&L. There will be expenditures within this spend that qualifies capital, so they'll flow to the balance sheet and amortize. But I didn't want to get into the technicalities of accounting, but really just emphasize our commitment to do the right thing and ensure that we produce our assets responsibly. Transitioning, how does finance fit into the organization? Obviously, we're here to support the strategy. And that strategy has been clearly defined and unwavering since we began this journey 20 years ago -- or for some of us, about 5 years ago. And that's accretive acquisition of long-lived assets that we want to run exceptionally well to generate returns for all stakeholders, not just investors, but all stakeholders. And we've built that strategy upon a foundation of conservative financial discipline. I think that we are both conservative in the way that we build our balance sheet, and we are creative in the way that we source funding. And John is going to talk about our commitment to low-cost financing. And within -- between the foundation and the strategic ambitions sit the pillars of finance and how we support those strategic ambitions. The first is low production decline. Obviously, in finance, Brad seems responsible for delivering that. But we partner with Jim Sheehan and with Rusty as we evaluate acquisitions to look at the asset types that we're looking to fold into the portfolio and certainly have confidence that they will contribute stable production, which comes with stable cash flow and properly protected with hedging that allows us to -- moving to the next point -- generate accretive operating cash margin. So it's not only just about the top line and making sure that you're growing revenue -- that's gotten too many companies in trouble. But it's making sure that you're focused on the margin that additional production and revenue comes with. And so we're very mindful about what would we add to the portfolio. To acquire that, we focus on the cost of capital. That's both equity and debt capital. And I think we've been incredibly creative with respect to how we've tapped into new and emerging markets to grow a really remarkable business. And then at the end of that -- an asset's life, we look to safely and systematically put it to bed. I'll cover this in a bit more detail later, but it's certainly something that we've talked a lot about, and we'll continue to do so. They say a picture is worth a thousand words. You can't expect to have me get up and not show our stock price. Certainly, there are times when we are incredibly frustrated when it doesn't seem to reflect the value that we believe we create. But if you step back and you look at where we began the journey and you just go forward with how we've compared to the Henry Hub price, to the FTSE 250 Index, to the FTSE 100 index, to a composite of our natural gas peers in Appalachia or our internationally listed E&Ps on London Stock Exchange, you can see that we've significantly outperformed, and it's a resilient model. We certainly believe that we have a job to continue to educate as to why we believe that the industry needs Diversified to be part of that responsible transition. And as Sandy pointed out, with natural gas dynamics, we'll be around for a very long time. But it's on us to make sure that our assets produce and produce responsibly. And we'll make those investments. So now I've talked about, of course, Teresa and I -- I enjoy to get to work with her. I want to give another point of recognition to Jim Sheehan, who joined. I certainly appreciate, as was pointed out, he joined with a trial by fire and has done an exceptional job coming up to speed. But these 2 gentlemen will begin -- will also share a part of the finance story. And I'd like to say that they were a package deal. One of our bankers, who I don't think is here today, introduced me to Randy. And Randy has spent decades in the industry and nearly 2 -- formerly at Southwestern Energy, where he led treasury and hedging, 2 of the most important elements of course, of our business. And Randy said, I'd love to join and help you all execute your strategy, but it's going to require that you hire John. And he worked with John at Southwestern and then John eventually moved on to lead IR for another energy company here in Houston. But the 2 of them have been incredible additions and behind these guys or alongside these guys are some incredible men and women sitting in Birmingham that are part of what we do every day. So I appreciate the chance that they're going to have to tell you a little bit about the financial pillars, and I'll be back to see you in a minute.

Thanks, Eric. Boy, Eric has [ polished his knee ]. It's hard to follow him. I've had the privilege of working with Eric since June of last year. Actually, John joined in May of last year. I joined in June of last year, probably in the height of COVID. So this is the first time I'm actually getting to meet a lot of you in person. Sorry, this has been great. And also, for those of you listening online, we look forward to meeting you in person in the future. As far as the pillars of the -- advance this here. So the first pillar that we're going to talk about with this financial business model. First of all, I'd like to say this is a proven model that Rusty had the insight and fortitude to start 20 years ago. And by executing on these pillars, he's built Diversified into the company it is today. So thanks to Rusty. First pillar we're going to talk about is low production declines. In my opinion, a humble opinion, this is the most important of all these pillars, having worked at a company before coming to Diversified -- production declines are extremely important. If you have high production declines, you're on a treadmill. And if you think about Diversified, this slide demonstrates that we -- our annual production decline, including the Central Region asset that we've acquired is now around 9%. And you can see on the slide -- I'm sorry, making this a little taller -- you can see on the slide that it's dramatically lower than the average of the public companies that operate in the U.S., 70% lower, 9%. And it's this low production decline that affords us tremendous advantages. Basically, if you think about it, the industry that we're in, we're producing our asset away every day. So the capital investment to replace that production is crucial. So if you have a low production decline, it doesn't require as much capital to replace that production. Therefore, you have greater free cash flow available to the company. And with the investor focus in our industry on free cash flow generation, that makes Diversified a tremendous investment option -- attractive investment option, I should say. So if you look at these, what I'd like to focus on here is, obviously, the capital intensity I just talked about. It also enables us to hedge our cash flow a lot easier because we have a low production decline, very stable, and that greater cash flow allows us to fund ESG initiatives, pay our reliable, strong dividend and also allows us to systematically retire debt over time. So we're not beholden to a volatile bond market that can come in and out. We can retire our debt over time, and obviously, fund acquisitions with other debt in the future. The second pillar I'd like to talk about is cash margins. In our industry, I talked about with production declines, commodity price volatility, the other thing that can get you. So we have been very diligent in hedging our future production volumes and have consistent top line revenue. Also, with our entry into the Central region, we've been able to expand our revenue, as Austin talked about earlier and I think Rusty talked about earlier as well. Basis differentials in the Central region are much tighter than other areas of the country. So we can sell our gas for higher prices, which enhance our revenue as well. The other part of the margin calculation is expenses, and this is the important differentiating factor. It's been talked about several times by other presenters. But we have an operations-focused mindset versus a traditional development-focused mindset. So we're not constantly thinking about drilling wells or putting people and resources to drilling wells, we're thinking about operating wells. And that allows us to optimize production and reduce costs over time. Also, we've been able -- I think Bobby and Maverick both talked about it. We've been able to -- when we acquire assets, we acquire the field operations people with those assets. So we use that institutional knowledge to basically integrate the assets quickly, also identify Smarter Asset Management opportunities very quickly and reduce costs and optimize production there as well. And the last thing I think Rusty talked about earlier, we've been able in Appalachia to gain scale by acquiring assets close to each other and create efficiencies. And even early on in Central region, we've been able to do that as well with the Tanos and Indigo assets. I think we're seeing some opportunities there, right, Brad? And so we hope to continue to do that in the future both in Central region and in Appalachia. So talk more about high cash margins and how hedging affects those high cash margins, I'll turn it over to my friend and Treasurer, John Crain.

Thanks, Randy. We've talked about hedging a little bit. Eric asked me to boil down our multibillion-dollar notional value hedge book into one slide in 30 seconds. So that's pretty tough to do. We've got a lot of materials out there on the website and other places. I know a lot of the analysts follow that, the bank group, too. So plenty of material out, and we're around for Q&A if I don't cover everything. But in a nutshell, just why do we hedge? I think it may be obvious from the presentation so far that we can control a lot of things with our business. And we're in a fortunate position to be able to do that. We can control the production forecast. We have a lot of long-life mature wells with a long history that we can use reservoir engineering software tools to forecast that. We feel really good about that. We can control our costs. We have a lot of team members in here that obviously stated a lot about that and what we're doing. We can't control price. Natural gas is a very volatile commodity, even more so in the last 2 to 3 months as it's now internationally kind of driven with some of the geopolitical events that happened in the last couple of months. So we hedge, in a nutshell, just to protect that cash margin. That cash margin goes to pay for a lot of things. There's a dividend. Obviously, everybody knows about that. There's debt repayment, and then there's also CapEx and now significant ESG funding that we want to be proactive about. So hedging really allows us to ensure that cash margin and make sure that we're able to execute on all those things that we forecast out and our stakeholders depend on. We -- obviously, just looking at the slide, in order to get line of sight, we kind of construct our hedge program to be more weighted towards the initial period. So for the first year, we're going to be more heavily hedged than years 2 and 3 just because as we move into near-term periods, we start to really kind of solidify what those cash margins are going to be and what the uses of those are. And just to kind of give you a little peek behind the curtain, we have biweekly hedge meetings with a lot of the executives in this room that are on that committee. We all trade notes about what we're seeing in our respective areas and all make a collective decision. And sometimes, we make a decision and prices go up, and we have a mark-to-market noncash loss. We take responsibility for that. And keeping with the presentation theme, sometimes, prices go down and we have a gain, and Rusty takes full credit for that. So that's pretty much how it works on the Hedge Committee. I'll touch real briefly on acquisition hedging. I wanted to -- I think we get some IR questions on that every day. We do hedge at the time of entering into an acquisition. There may be a little bit of misconception about that. We don't hedge discrete volumes associated with that acquisition. We layer that acquisition into our consolidated production profile and look at where we stand pro forma for that acquisition and layer on hedges that meet our risk management policies and coverage limits, as outlined above. So you'll Rusty talk about -- we get the question a lot, are you hedging this acquisition? Well, yes and no. I mean we're layering on hedges because we want to protect risk, but we don't always hedge just discrete them out of that acquisition, just depends on where we are from a consolidated perspective. Moving on to debt capital markets, just our philosophy around that. I mean Diversified's in the cost of capital gain. We have to have a low cost of capital to be able to be competitive on executing our business strategy, requiring all these mature assets. So that's one thing we focus a lot on, on the debt side of the equation, and that really takes 2 forms. We have a bank facility led by KeyBanc, and many of the bankers that are part of that are in this room. It's a 17-member facility. We increased the size of that in August when we closed on the Tanos acquisition, and we were very happy to bring on some new banks and get that done. We have our fall redetermination -- semiannual redetermination underway right now. So for the bankers in the room, hopefully, you brought your commitment letters and Jay will be taking those on the way out. Right, Jay? The other part of the equation is the amortizing secured debt structures. We follow a lot about the right product for us or solution for us and the way we finance the company in terms of term debt. And we really like the amortizing structure. Rusty's made the comment before. He believes that when we take out debt, you should actually pay it back, which is a novel concept sometimes in this industry. But we put that on autopilot and reduce it over time, kind of like your home mortgage. And so that principal reduction is what's depicted in the lower right-hand corner. And one other thing I'll note about all of this, we're talking a lot about ESG. We're looking heavily into some sustainability-linked bond and loan structures that we could add on to our existing and future debt offerings. I mean if we're going to be out there spending capital and improving our ESG metrics, we might as well get credit for that in terms of the notes that we issue. So that can take various shapes and forms in how you get the benefits. You could have a little coupon or you could just broaden the investor base for those who are willing to deploy capital to invest in those instruments. So we're very excited about that and probably hearing from us on that in the near future. The top-right graph, just to kind of explain that a little bit. The gray lines are kind of the range that we like to keep our corporate leverage profile in. And the blue line is our historical leverage on a consolidated level. So you can see we're within that range or below over the most recent periods. And the orange line is the peer average. One thing I wanted to note on this, we do -- you'll see in some of our materials, we do have a leverage covenant of 3.25x. That only applies to our bank assets, and we have our bank assets and then we have our ABS-secured debt assets. The secured debt assets are more leverage just because they're -- they have long-term hedges associated with them, they're amortizing structures. So the bank assets are lower leverage, like 1 to 1.5x traditionally. So that 3.25 does not apply to the blue line you see on the screen. It applies to a lower leverage. So essentially, if we align ourselves or continue to maintain our self-imposed 2.5x leverage mandate, by nature, by math, the actual bank leverage that's associated with that covenant will be lower within that range. So I think that's all I have. I think I'll turn it back to Eric.

Okay. All right. Well, I get to cover everybody's favorite topic, asset retirement. I'm not sure if you're too familiar with it, but if you're not, we've got a 13-page deck on our website that you're welcome to peruse at your leisure. But we do spend a lot of time in -- and all kidding aside, we recognize we built a different portfolio. And so this is unique to us, and we should spend time helping folks understand how we think about asset retirement and how ultimately we'll make sure that we honor the commitment into which we enter when we buy assets, which is also safely retire those. To frame the conversation, we'll talk a little bit about where we've been, and then we'll talk about where we are going, which Brad talked about in detail earlier. But essentially recognizing that we were building a unique portfolio back in 2018 on the heels of the Titan acquisition in 2017, we were proactive in sitting down with the states in which we were acquiring assets to provide clarity not only to the state, but to us as operator, and ultimately, to our stakeholders, both equity and debt lenders, as to exactly how they could expect this obligation to affect cash flow over the foreseeable future. And so I'm going to end with a more hypothetical model that demonstrates how the wells put themselves to bed over their productive lives. But essentially, those state agreements that included returning wells to production, which Bob has talked about putting over 2,000 wells into production before this year, another 800 this year alone, includes plugging a certain number per year. And that's just 80 wells per year. We've always exceeded that. You see that we remind we plugged over 300 wells since we began the journey, which is 25% above that minimum. So we're not shooting for the bottom. We obviously shoot to exceed. But as we plan for the future, you've heard a commitment today that we're going to increase the pace at which we are plugging wells. And that's going to move up to 200 wells a year beginning in 2023 or earlier. And we're going to get there because the capacity just doesn't exist today. But on the heels of the tremendous success that we've had in West Virginia, where we set up our first crew, made investments in equipment, not only have we seen that we've been able to improve our cycle time, which means we can plug more wells, we've seen that we can plug them more efficiently, which shouldn't come as a surprise because anything you do with great frequency, you should learn to do better. And why pay someone else to take away that efficiency? And so we believe in being vertically integrated gives us better control of our expenses that our line of sight insulates from periods of inflationary pressure but certainly allows us to control our own destiny. And so with those investments, we're confident that we'll not only be able to continue to meet, but significantly be targeting a 250% increase over those minimum state requirements that continue to give real comfort to everybody that this is a long-life asset that we're buying. And we're going to make it longer by making the type of ESG investments that we've talked about today. Now this one we can really geek out on because there are some numbers on here that tell 3 different stories. And I want to compare it to -- Paul did a great job earlier talking about the differences in IPCC reporting versus EPA reporting. And so when we talk about asset retirement, it's important to think about the context of the numbers because people will often misunderstand how or what we're referencing. But regardless of the numbers, the fundamental inputs that go into evaluating this, whether it's on the A&D side, should we make this investment; or whether it's on the financial reporting side, how should my investors think about asset retirement in the financial statements, the inputs are the same, the timing of the well retirement. When am I going to have to extend this cash? And it's really important, again, to link the ESG commitments that we're making, give real confidence to that when we talk about a 50-year horizon, not only do all the indications certainly point to demand continuing to be more than robust over that period of time, but we're going to earn a right to continue to have our assets at the table by making sure that they're the best-in-class assets out there, making us investments in assets that others simply were not. Whether that's from a financial perspective or human capital, we're giving them both, gives us confidence that this portfolio will be around for a long time. And then the cost to plug. You heard Brad mentioned earlier that our peers are calling and asking, how are you plugging wells for as little as you are. And it's because we pay attention to the details, and we focus on managing the operation just as though it was production. We treat it with the same care. And any time you're doing something for yourself, one of our employees like to say, any time you own the home, you treat it differently than when you rent the home. Similarly, controlling the process has allowed us to really control our costs. In West Virginia where we set up our program, we're now doing them for about 25% less than when we had our hybrid model, where we partnered internal expertise with external expertise. So we're certainly involved in to believe that the cost assumptions that go into our estimates are more than conservative and certainly have a downward bias, both by efficiency and by advancements in technology and just modifications of techniques that allow you to plug the wells in a different way but achieve the same safe result. And then the differentiating factor between the different lenses through which we think about that retirement is really just the discount rate. And so we talk about discount rate because the industry has valued assets generally on a PV10 basis, discounting the cash flows from the wells at 10%. So similarly, you'd expect to discount future obligations on the same basis. So people often look at the asset retirement on a PV10 basis, which differs significantly, particularly as a London-listed company from the way in which you record asset retirement on the balance sheet, which uses, for us, a 2.9% discount rate. So a significant change. But what we show here is 3 different lenses through which you can look at this. If we want to take the subjectivity of discount rates out of the equation and talk just about well timing and plugging costs, what you see is that we have nearly -- and this is as of June 30 because it looks remarkably different when we turn the next page and look at July -- or pricing as of October. But as of June 30, the net cash flows that would come back to Birmingham after paying all operating expenses are just under $7 billion, $6.7 billion. And that compares to an asset retirement undiscounted to retire the entire well portfolio of $1.7 billion. So there's a 4:1 ratio of free cash flow relative to that obligation. And you'll see that additional cash flow in excess of P&A is used to pay our taxes, it's used to pay our G&A, it's used to retire our debt and to pay our dividend. But when you look at that same undiscounted cash flow through the lens of PV10, given the long-life nature that John articulated really well, we have tremendous engineering and tremendous well control, having existing and the oldest producing basin in the United States, we have tremendous confidence in the life of these assets. On a PV10 basis, the value of our assets, of our reserves, is $2.5 billion relative to just under $70 million in ARO. So you can see it's a very forward-looking, long-dated obligation. Taking that $7 million and simply applying a different discount rate, you add $444 million, which takes you to just under -- or just over $0.5 billion that sits on the balance sheet. While all of that is interesting, I think the bigger question is, can the assets take care of responsibly managing their own well retirement and properly managed? In this graph, it looks busy. I'll try to distill it, resoundingly says, yes, they can. So you remember earlier at June 30, the undiscounted cash flows from the assets was $6.7 billion. Well, given what we've seen in commodity prices with the move up in the forward curve or in the natural gas curve, you've seen that net cash flow rise to $9 billion that ultimately we have at our disposal to manage the business. That allows us, if you look at the -- taking the sources over to the uses, the first thing we think about, of course, is retiring our debt. And interestingly and unique to us, you could see that under the scenario, we would be debt-free in less than 10 years. And then rather than continuing to make debt service payments as part of our amortizing structures in the model, we begin to make deposits into a reserve account to prefund that asset retirement. Now all the while, asset retirement is going on. You can see us ramping from 100 wells now to 200 wells next year, and we assume a 100-well increase per year until we arrive at that terminal rate necessary to plug the entire portfolio. That's $1.7 billion. $3 billion we'll use to pay taxes, which is part of our good social aspect of our ESG. We'll pay our CapEx that's necessary to reinvest and just maintaining the low declines in the business. And of course, we'll take care of all the expenses back in Birmingham to run the business. When you look at all of that, that leaves $2.5 billion for dividends under this scenario. And what's really important, a bit lost on this, if you went and pulled the 13-page presentation that I mentioned is on our website, what you'd find is that we used to present this on a 75-year basis. Because, frankly, the assets will produce, according to the engineering data, for 75 years and all of them, but we'll have productive wells that go out for 75 years. But we've shown this on a 50-year basis. We've reduced the horizon under which we're running the scenario by 30%, and it's still an exceptional result. I'll wrap up talking about dividends, which we prefer to talk about. And we certainly are very proud of the track record. We have come to see you in London many times and asked for your help funding what we believe are very accretive acquisitions. And we believe that we've rewarded you well for trusting us with your investment. Over that period of time from 2017 to now, we've increased our dividend per share 10 times, 2 of which were during COVID when others were either cutting or eliminating their dividend entirely. So truly a differentiated dividend model and one that we believe is very sustainable. But when we talk about increasing, they weren't just modest increases. We've increased it 800% over a 4.5-year period, going from just $0.02 per year to now annualize it at $0.17. So really, really impactful dividend that was part of that total shareholder return graph that I showed you earlier. We've begun to evolve our conversation about dividends. You remember that on a pro forma basis, including the Central region acquisitions, 2020 EBITDA would have been over $0.5 billion. So we want to be a really good steward of all that cash and making sure that we use it wisely to generate the best return we can for investors. Dividends will always be a key piece of that strategy. Rusty said, for far too long, the industry asked you to trust that the returns would eventually be there, but just not today. And so we'll continue to pay that quarterly dividend. And we talked about our dividend in terms of a percentage of free cash flow. And 40% of free cash flow, when you generate the kind of margins that we do, which we protect with hedging, is a very sustainable payout. That allows us to keep the additional money back that we need to pay our debt, to reinvest into the business and to reinvest into our ESG initiatives. But as we've seen that yield continue to grow as we've grown the dividend, we do want to be mindful that the investors may be asking us to take a larger portion of the increase in cash flow as we continue to grow the business and reinvest that, reinvest it in the type of assets that we can acquire at exceptional rates and reduce the need for future equity infusion. Because when you are generating nearly $0.5 billion of cash flow every year, there is a significant amount that you can begin to do some really meaningful acquisitions to not just replace the production because as Randy talked about, we had very low production decline, but to begin to increase that production base that will stay on a low-decline profile, which will give greater and greater confidence in the dividend that we pay. So we'll start to look at our dividend in the context of the yield that other E&Ps are paying, particularly the integrated, and we recognize we'll need to yield more than that. And so somewhere between that 40% of free cash flow and a yield similar to the other E&Ps is where we'll manage that dividend. You can see we're trading at 500 basis points north of the integrated. So if you haven't bought your shares, I'd certainly advise that you think about that. But we're really proud of the dividend strategy and our commitment to the type of assets that allow us to do this. And we will look to allocate that cash flow to either nondilutive organic growth, and that could be organic by looking for ways to capitalize on the assets that we own, through reinvestment and the Smarter Asset Management activities that do arrest declines. It could be asset purchases, but to also expanding our ESG initiatives as we see what's really gaining traction and allowing us to hit that net-zero 2040 target, you're going to see us lean into that. And we'll fund what we need to, although we are confident, I want to reiterate, in the level of investment that we've initially committed. And then we'll obviously have capital available for share buybacks if we believe that is the highest and best use at that point in time. So with that, I want to wrap up again just with our commitment on the -- what's really new today, the financial story has been unwavering and unchanged for quite some time. But we are really adding the emphasis of something that's always been part of the Smarter Asset Management DNA to remind that we're going to be focused on asset retirement and expanding our internal capabilities, which will allow us to run faster and more efficiently. We're going to focus on improved emissions reductions, so tangibly reducing what we emit, and then doing a really good job of reporting that to you in transparency. And then we're going to do that by making investments in lead detection and really good personnel to run the -- to run our operation as well as putting the right tools in your hand. And we believe that by doing so, we'll not only unlock additional stakeholder value that will demonstrate that we have the culture focused on ESG that we presented to you today and that we will always be industry-leading with respect to what we do to deliver value. I will yield the floor to Rusty for closing comments before Q&A.

Thanks. Thank you, guys. You guys can see we have put together -- I mean, today, you've heard from a lot of our teams different subjects. We obviously, as I said earlier, have in '18, it's always -- I always get a little tear in my eye when they start quoting me from all the time they spend with me. But yes, it's really clear that we have talented people across the organization that are capable of executing this strategy at a very high level. What's the next 20 years? I kind of look at it more of the same in some ways, but different from the standpoint that we know the world is going to be a little different. And we're going to be part of solving the puzzle as it relates to the ESG story and the transition of energy. We're going to be providing an essential role of continuing to operate mature assets through that energy transition and for all the reasons we talked about. Consolidator of choice. I believe we're getting very close to being that already. There's not one process that's run that we don't get a call. Jim will attest to that. I mean we field more calls than we could even take at this point. Don't we, Jim? And so we're going to continue to be the consolidator of choice. We're going to continue to focus on our PDP-focused acquisition strategy and relentless operations around that. And then we obviously had talked earlier about the potential for dual listing, which is kind of being accelerated to some degree as we enter into 2022. I'll end with this. This was my slide. This was the one slide I do get credit for, by the way. They gave me a credit for a lot of them, but this one is mine. As you look at Diversified, if you want to invest -- if you look at the E&P sector and you're wanting to invest in a company that has a zero tolerance -- we talked about zero tolerance all day. I'm going to say it again, zero tolerance for methane leaks and is focused on the identification and reduction of emissions as Diversified. If you want a company that maintains a disciplined approach to acquisition valuations, as we have all along; low leverage, which we have all along; and strong liquidity, that's Diversified. If you want a company that's protecting cash flows and investor returns with a proven hedge strategy and operational excellence, that's Diversified. Focused on efficient operations. You've seen that today through all these presentations the way we focus on our operations. And focusing on high operational margins, that's Diversified. And emphasizes and retires wells safely and systematically at the end of their economic lives, then you should be investing in Diversified. But most importantly, prioritizes stakeholder returns. I'm a large shareholder. I'm in the game with everybody else. And so we -- you can tell, as we sit here today and we talk, shareholders are extremely important step. All the other things we're going to do, but it all comes back to, are we protecting our shareholders and doing what they want us to do in terms of shareholder returns. That's Diversified. So you've heard all this today. We appreciate your time. I think we have another round of questions. Is that right? So thank you all for coming, and we'll be open here for questions.

Questions from the floor first before I turn to the webcast. Neil?

Here in the states, the shareholder return being the top of de jure, I just want to make sure I'm clear. Rusty, when you and Eric, both ops and the finance group look out, could you give your sort of thoughts on a go-forward, obviously, share on buybacks versus div and when it comes to div, obviously, quarterly versus some are doing special, some are doing variable, all of the above?

Yes. Well, on the dividend -- am I on? On the dividend, I want to make sure people understood what Eric was talking about was a moderation of the growth of the dividend, not ever a cut in the dividend. We're very comfortable with the dividend that we're paying now. It's solid. It's protected. You can see it's covered very well. As we grow the company, what we're talking about is instead of growing the dividend at the level that we have in the past is maybe moderating the growth and reinvesting into acquisitions and other things that will grow the company and make cash flows even that more robust. Buybacks are always on the table when we're seeing share price that is not reflective of the value of the company. And in some ways, we're there right now. And so what we want to do is be opportunistic with the funds and the cash that we have to put it and invest it in the things that have the biggest return. If that's buybacks, it will be buybacks. If it's acquisitions, it will be acquisitions. If it's dividends, then it'll be dividends, whatever it needs to be to get our shareholders the most return. I can't tell you there's a framework for it as we move forward over the next several months, but I can tell you that everything is on the table and that we're going to be opportunistic and do what's best for our shareholders.

How does growth really sort of fit in there? I mean, obviously, it's kind of a taboo word these days in the states, even though I'm going to dispute that, but what are your thoughts?

Yes. I don't even -- honestly, we obviously look at production, and it's a big part of what we do. Production growth doesn't really mean a lot to me. I see companies that grow production, and they'll grow the bottom line. I want to grow the bottom line. That cash flow number at the bottom is the one that matters. All this other stuff is great, but if you don't have this, it just doesn't matter. And so we're focused on production -- maintaining production more than growing it with the existing portfolio, easing and marginalizing the decline rates as much as possible, keeping your costs in check and growing that bottom line number. That's the most important number for me.

Yes. I'd echo that it isn't about production at all. I hope what you've heard is that we have a very rigorous asset evaluation process. If we see what we believe to be value by acquiring the assets, it's going to be because of what it does to cash flow and how it ultimately allows us to either grow that dividend or position us to increase our organic replacement or reinvestment into the business. And you've seen companies get in trouble when their declines are high and they feel compelled to, in many cases, drill themselves to try to remain -- tread water by drilling. But when you have a really low decline to start with, we can -- we are afforded patience. And so we can take a pause if we don't see assets at the valuations that make sense for us. And Rusty tells the story. Many of the best deals we do are the ones he didn't do because...

There's another here.

A good asset at the wrong price is a bad deal, and that's fundamental to the way that we look at doing business. So we'll pass on deal after deal after deal until we can add the right accretion and add the right production back.

In some ways, I think a lot of the shale companies are relieved that all of a sudden, the equity capital markets aren't rewarding them for growth in production because now they're not on the treadmill as hard as they were previously. I mean you've got a steep declining rate and you have to get a growth on top of that. A lot of capital and it's a lot of work. And so the ones that I've spoken to are pretty relieved that, hey, we're okay with holding production flat and cash flow in our business.

[ 5% ] cut to decommissioning expenditure just by doing it in-house. So clearly, we have undiscounted $1.7 billion of opportunity there in-house. If you were to do it in-house, that's significant savings and, of course, then higher distribution. You've done also third-party from the midstream in terms of handling gas and so on here. Presumably, this is a business that you could also do in terms of retiring some of it because you only own a fraction of the wells of the 1 million wells there are to plug in the U.S. over time. So there must be a significant opportunity there. So how do you see the build-out of your decommissioning business? And how do you see that rolling out over the next few decades?

Well, you must be in some of the meetings we've been having because we've been having those conversations. But -- and Brad can give you a little more information. But I do believe that it's imperative for us to have our own boots on the ground as it relates to these retirement programs because I do think that with the infrastructure bill and others that costs will -- the states don't care. They don't know how to manage money or expenses. So they're just going to spend whatever they can that -- they're going to get to $7 billion, they're don't spend. I think that we cannot only put boots on the ground and do our own stuff, but we could potentially, and we talked about this, work for the states to plug and retire wells for them also at a higher comp.

Yes. Our first priority, as I mentioned earlier, stand up, our team in Pennsylvania. We plan on replicating our success in Pennsylvania. And once we get that done, [ 0.5 years ], potential expansion there as well. But we understand it's a vertical part of our business that we will -- that we can add value to. And so we're going to look to exploit that.

And we can pay for our own plugging programs with other people's money.

OPM.

Yes. Yes, and I think you highlight a good point. I mean, if you think about extrapolating the early time benefits across $1.7 billion, that's a tremendous amount of value. But when you further look at the composition of that improvement, that it's not just one element, it's multiple, that gives us the ability to even compound what we've seen early time. It's controlling the pace at which we move. So we're not dependent upon scheduling a third party. We know how to set the schedule we can get in and out more quickly. So that cycle time is a result of an improvement. And then we are a thought leader in this space. If you do something enough, you should be the best at it. And so we've worked with West Virginia on a pilot program to modify the way in which certain plugging jobs are done, and that modifications resulted in the same safe end result but at a lower cost. And so when you think about modifying techniques, the potential of emerging technology and just the repetition, I think you've got tremendous downward potential in that rather than upward.

And you know I always like higher distribution.

Yes. So as a follow-on from that. So you're talking about getting to 200 decommissioning wells a year by adding additional crew and then moving into Pennsylvania. So when the model talked about [ 1 million ] addition retirement wells per year until we get to, whatever it is, year 10, 12, there's a physical plan behind that? Are you -- do you visualize adding the crews to be able to do it? Because I have a pushback from people saying, like, is the actual capacity to do this kind of number of wells per year.

Well, 100 million, is that what you said?

You mentioned -- Eric mentioned adding 100 wells...

100 wells per year.

So that gets you to make over 1,000 whatever...

You will eventually get that number. But think about it, it's simple supply and demand. And I think what's been pointed out is that the industry has not done a very good job of retiring its assets. Therefore, you haven't had a significant stand up of services to retire assets. So we're saying, one, we'll continue to work with third-party experts to partner with us to do plugging, and we'll do that in the states where we don't have our own crews or where we want to supplement our own crews. But we're going to make the internal commitment to make the investment in people and in equipment that will allow us to control the destiny to put our own portfolio at that. And it's that investment that we create capacity. But as Rusty said and Alex alluded to, it can become a service, to build in services and external services function within the business.

The infrastructure bill, I believe, will -- the good thing about it is that it will create more service to meet that demand. The states, they're getting that money. The states have more orphaned, abandoned wells than anybody in the industry by far. And we're not talking about a few years' worth of work. We're talking decades worth of work. I mean you can put a lot of resources to this and the states would still have decades worth of plugging to do, okay? So it's going to generate additional resources that are going to come into this market to help fill that need.

Good news on the $37 million divestment announced last week. Can you give any color on the scale and value of other pieces of undeveloped acreage you may look to divest?

Well, I think there's a couple of things there. We still have some acreage remaining on the Tanos deal that will -- that's under consideration. I know Jim has been looking around to see if there's a potential buyer for that. We obviously have a lot of acreage in Appalachia. Most of it's conventional. We do have some Marcellus acreage, I believe, in Northeast PA. We're not sure if we want to sell that. We're kind of looking to see what our options are on that. We may JV it or do some other kind of methodology on that. Obviously, the acreage that we're picking up in Oklahoma is pretty large. And so yes, we haven't really evaluated other big sales at this point. That was the one that was at the top of the list, but we're constantly evaluating our options with acreage and undeveloped.

State in each of the 4 Central region assets, in particular, are the 5 immature Tanos wells declining in line with expectations?

Maybe gets into the -- maybe you'll have to answer that question #5. The undeveloped wells that they've drilled, yes, at the end?

In mature Tanos wells declining at the rate you expected?

Yes, they are. They're on the production.

I think all the acquisitions are. I mean the one thing that I was real clear with as we started entering the Central region -- because Appalachia things started to get really consolidated and merged together. I said at the very least in the Central region, I don't care about the cost structure being surrogated, but I want the production and I wanted to forecast it off of our engineering, and I will be comparing back to our forecasted engineering so we can see how these things are performing versus the forecast engineering. So we've set that up to do that. And so far, I think it's been pretty accurate in terms of...

We're very tight on the curves.

Yes.

And a finance question, what sort of cost and compliance obligations are associated with a secondary dual listing?

A lot of that -- there will be some incremental costs, but we already engaged PwC to do our audit, which is, I would think, the most significant element of a listing is the audit costs associated with that. They do our work in London, but they use their Birmingham-based team. So we have, I think, real synergies there. Outside of that, we stand up. We have a financial reporting team that does exceptional work. If you were to do when we provide U.S. GAAP reporting to our existing bank group alongside our IFRS reporting, and they're incredibly similar. There are very [ few ] differences. So it won't require a significant add into the accounting team to manage 2 sets of books given the nature of the business that we have. So there will be some additional compliance costs, but it would not be significant, certainly relative to the value that we believe it would add.

[ Nathan ]?

So maybe to follow that one up. You mentioned about accelerating the dual listing. Is there a particular catalyst that would make you actually go ahead with the dual listing? Or is it just something you think it goes to the evolution of the business?

It's purely the evolution of the business, and ultimately, just having an additional pool of capital that would be available to us as we look forward. The one thing that we've really -- if there was any disadvantage to our model, it's been the ability to use shares as currency, not because our shares aren't valuable, but a lot of U.S. companies don't want to take U.K.-based shares. It's simple as that. And we're starting to see some companies come around to it a little more just because they probably have to. But we want to have the ability to offer them U.S. currency as well as the U.K. currency. So I think that's part of it. And I think just getting a higher and larger investor base is the other.

Other question from the webcast, how does the decline rate remain so low versus peers?

Well, I mean, it starts with what you're buying.

That's right.

I mean, when you're buying assets that aren't in their high decline first 2, 3 years of age, I mean we're looking at a vintage that has a much lower decline to start with. And then once you take a lower decline rate to start with, the [ SAM ] projects and you actually focus on it, what we find is that you can arrest the decline. I don't know if there's been one acquisition that we've done where we haven't done better on the decline rates than what the engineering would have said that we picked up from the acquisition. And it's just simply because we're focusing on the assets and we're putting time and attention, operating the assets on a daily basis. And Bob talked about it. We're putting assets back in production and fixing leaks and doing all the things that's necessary to get the gas produced and to the meter. And when you do that, you do better. And so the decline rates start off in a much better place than, say, the big drilling companies, but then we're managing the wells a little differently.

Yes. It really is about what we buy them in their life cycle. We had a very astute investor in London that went on a napkin in a meeting drew a decline curve and drew a line through the middle of it and said, the developer likes to own this piece and Diversified likes to buy the tail. And if you look at any decline on a well, it has that shape that moves out into the right with lower and lower, lower annual declines as it matures. And if you're buying maturing production or mature production, it naturally is going to have a lower decline. So it isn't magic. It really is being committed to that asset profile.

And the next question is from Simon Scholes from First Berlin. In which part of your operations is it most difficult to reduce methane emissions? And what proportion of your methane emissions does this account for?

I don't think there's any difficulty in reducing methane emissions. The work that we're going to do with our emissions detection equipment with our well fingers being very focused on identifying banks or areas of mainland will be extremely important to identify the leaks. And we'll put plans together to go out and repair. So I don't believe there's any difficulty. The second part of the question was what percentage?

Yes. Probably the compression is probably the more advanced.

You're right. And so earlier. Our compression assets really have a very small methane profile other than a few pneumatic valves. The compression assets, while we do have a large portion of horsepower that is combustion engine with the CO2, those are the bigger projects that involve more capital, more planning, more operational impact. So it's not methane, but the compression would be the more complex to [ sequence ].

Follow-up from Simon, what is the main driver behind the decision to moderate dividend growth? Is it additional ESG costs or the likely increase in production decline rate or other factors?

Has nothing to do with decline rates. It has to do with reinvesting in growth in the business. Yes, some of that may go to ESG at some point. It's really not next year. But really, what it boils down to is that we're trading at a very high dividend yield that the investors have not priced to a level that we feel it should be. And so what we're going to do is reinvest more of that cash flow. We're not going to stop the growth of the dividend is what I'm saying. We're moderating it. But we'll put more cash flow back into the organic growth in the business, so we don't have to use shares as much or whatever.

Well, and I'd couple that. I think maybe you asked earlier today, and apologies if I'm attributing this to the wrong person, whether or not what we talked about from an ESG perspective today addresses the concerns that we were hearing from investors. And I'd say we have, Rusty and I and Brad, have a significant amount of dialogue with our investors. And what we were hearing was that people would like to see a higher level of reinvestment that gives greater confidence to the sustainability of that dividend. And so we've increased it. We've demonstrated that we can comfortably when it's 40% of cash flow. We're already holding back enough to make the reinvestment into the business that's necessary. But if your investors are saying, listen, the dividend yield is healthy, and some certainly would want more. But holistically, there was really a chorus of individuals that were saying, you've got the cash. Reinvest into good assets that will give us greater confidence in your ability to meet your dividend obligation along with the other stakeholder obligations over time. So it really -- and apologies if I was at all unclear. To Rusty's point, his wife would never let me cut that dividend. So we are very committed to the payouts that we have. They're very comfortable, but it really is about stewarding those cash flows very wisely. And we think holding back for whether it's share buybacks reinvest into the business. It could be a special dividend. If we have held cash back and just don't see a use for it or investments in additional initiatives, it just gives us that optionality.

Last question, Mark?

Is it feasible to talk about electric compression moving to that?

Yes. And that's part of our strategy.

All right. I think we'll wrap it up there. Thank you, everyone.

Yes, sir. Thank you.

I would want to thank you for bringing your fantastic team.

Thank you.

Absolutely appreciate it, every word of it. And it's just what we needed. And see if you can do well, we'd do it again, but every single one, thank you very much indeed.

Go back and talent. Thank you all. Appreciate it.