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Diversified Gas & Oil strikes second coronavirus lockdown acquisition

Along with the Carbon Energy asset acquisition agreed a month ago the London-listed firm has agreed to buy US$235mln of wells and midstream assets in recent weeks

Diversified Gas & Oil PLC - Diversified Gas & Oil strikes second lockdown acquisition

Diversified Gas & Oil PLC (LON:DGOC) has made its second coronavirus lockdown deal, agreeing the acquisition of another package of wells and midstream assets.

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.

READ: DGOC agrees acquisition of Carbon Energy assets in Appalacia

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."

Quick facts: Diversified Gas & Oil PLC

Price: 107.8 GBX

LSE:DGOC
Market: LSE
Market Cap: £762.24 m
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