In a statement after Monday’s close the company told investors that the acquisition is similar to the Carbon Energy deal agreed a month ago, and both transactions are being supported by an equity funding.
The latest deal, for what the group described as ‘certain upstream and midstream assets from a US-listed oil and gas company’, sees the London-listed firm pay US$125mln along with the US$110mln agreed in the separate Carbon Energy deal announced in early April.
Altogether the US$235mln of acquisitions sees DGOC pick up 7,000 wells, producing some 18,000 barrels oil equivalent production which equates to around 20% of last year’s production.
They carry a total of 122mln barrels of PDP reserves (valued at US$374mln), have estimated cash cost of US$5.99 per barrel of oil equivalent (boepd), and are said to be immediately accretive to earnings and dividends.
DGOC is now launching an accelerated bookbuild process for a share placing. It is aiming to raise US$87mln through the share sale. The acquisition will also be supported by new long-term amortising senior notes, for US$160mln-165mln.
"DGO's continued success is built on its ability to capitalise on opportunities to acquire and enhance complementary producing assets and to leverage our operational excellence and cost discipline to extract maximum value,” Rusty Hutson, DGOC chief executive said in a statement.
“These potential acquisitions are entirely consistent with this growth strategy and represent a compelling opportunity to enhance the profitability of the business, and subsequently the shareholder returns.”
Hutson added: “Our unique business model, underpinned by low-cost and low-risk cash flow from US natural gas, enables the company to deliver shareholder returns at a time when many other industry players are unable to do so.
“We look forward to providing an update on this process in due course as we seek value creation opportunities through prudent growth and funding."