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Diversified Gas and Oil plc

Diversified Gas & Oil PLC A highly profitable business underpinned by a healthy financial position

Diversified Gas & Oil PLC (LON: DGOC), the US based gas and oil producer, has today announced the following operational and trading update.

Financial Update

The Board is pleased to report that based on its performance during the year-to-date, results for the year ended 31 December 2018 are expected to be materially ahead of current market expectations. Inclusive of the contribution from DGO’s Core Appalachia (“Core”) operations acquired in October 2018 and continued strong performance from its previously integrated operations including the assets acquired from EQT in July 2018, the financial and operational performance for the month of October highlights the Company’s successful progress with regard to asset integration and associated operating efficiencies.

Key performance indicators include*:

· October Adjusted EBITDA** of $23.6 million (hedged) and a 60% margin (unhedged)

· 10 months to 31 October 2018 Adjusted EBITDA of $96.3 million (hedged)

· Net Debt ($507 million at 30 November 2018) to Adjusted Annualized EBITDA (October 2018; $283 million) of ~1.8x

· Available Liquidity of $216 million as at 30 November 2018 after accounting for the 2.8 cents per share dividend to be paid on 19 December 2018

* all figures presented are unaudited

** Adjusted EBITDA represents earnings before interest, taxes, depletion, depreciation and amortization and adjustments for non-recurring items such as gain on the sale of assets, acquisition related expenses and integration costs, mark-to-market adjustments related to the Company’s hedge portfolio, non-cash equity compensation charges and items of a similar nature.

Operations and Asset Integration Update

· Net daily production for September was ~60 thousand barrels of oil equivalency per day (MBOEPD), increasing to ~70 MBOEPD inclusive of the Company’s most recently completed acquisition of Core, effective 1 October 2018 (up 210% and 262% respectively from average net daily production for the half-year 2018)

· “Smarter Well Management” programmes over the past 90 days have restored ~130 wells to production adding to the previously reported 524 wells restored to production from 1 January 2017 through 31 August 2018

· Immediately recognizing the anticipated Core acquisition synergies, leveraging the Company’s enlarged midstream footprint, by redirecting 9,000 million cubic feet per day (MCFPD) (approximately 1,500 MBOEPD) of Core’s natural gas production to the Mark West processing facility, increasing October revenue by approximately $600,000 (reflecting strong demand and pricing).

· DGO’s integration of recently acquired assets is progressing as expected, including development of a managed information services model that provides flexibility for future growth & acquisitions with an emphasis on security, speed and scalability.

Commenting on the operations and trading update, Diversified Gas & Oil CEO Rusty Hutson said:

“We are very pleased with the progress we are making in terms of integrating the most recently acquired assets from Core and extracting maximum value from the expanded portfolio. As evidenced by our financial performance for the month of October, we have a highly profitable business underpinned by a healthy financial position. The dynamics for natural gas pricing in our region are positive and we are benefitting from a material rise in local pricing. We continue to deliver on our commitment to either bring wells back onstream, having restored nearly 130 wells to production in the past 90 days, or to decommission them in a timely fashion. We continue to work with the relevant authorities in our States of operations to reach long-term decommissioning agreements that meet the needs of all parties.”