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

- Link: https://www.directorstalkinterviews.com/diversified-gas-oil-plc-a-highly-profitable-business-underpinned-by-a-healthy-financial-position/412762388
- Published: 2018-12-03T07:23:37+00:00
- Author: Giles Arbor

**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.”

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