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Diversified Gas and Oil plc

INTERVIEW: Diversified Gas and Oil Another material acquisition

Diversified Gas & Oil plc (LON:DGOC) CEO Rusty Hutson talks to DirectorsTalk about the acquisition of Core Appalachia Holding Co LLC for a total consideration of $183 million. Rusty talks us through the highlights of the transaction, explains how this helps to optimise the assets bought previously in the year, the rationale behind the move and further opportunities in the Appalachian Basin.

Diversified Gas & Oil PLC is an operator of oil and gas producing assets. Its innovative, disciplined investment strategy is focused on the acquisition of mature, low-decline and low-risk wells, enhancement of operations with a focus on efficiency, and maximization of profitability for shareholders. Founded in 2001, DGO has deep roots in the mineral-rich Appalachian United States, and currently produces approximately 500,000 mcfe/day of natural gas.

 

Commenting on the Acquisition, Diversified Gas & Oil’s CEO Rusty Hutson said: 

“Our strategic acquisition of Core will allow us to unlock significant value from our enlarged base of assets in Kentucky and West Virginia that would otherwise not be achievable on a stand-alone basis. Core’s assets are highly contiguous to the assets we acquired from EQT earlier this year and materially expand our midstream footprint in Southern Appalachia.  We expect to deliver both immediate and near-term synergies by combining these assets, resulting in higher revenues and lower operating expenses which will support our exceptional EBITDA margins across the portfolio and drive dividend payouts higher.

This acquisition increases our exposure to liquids pricing, and the expansion of our midstream assets enhances the underlying economics of our sizeable proved-developed-producing reserves by allowing us to realize the processing uplift from our natural gas liquids while simultaneously reducing our transportation costs. Additionally, the midstream assets allow us the optionality to move our production to different sales points, maximizing realized pricing.  We have strategically diversified our business beyond upstream, and now own a significant network of gathering assets in Kentucky and West Virginia providing added control over the flow of our production and an additional revenue stream as we transport gas for other operators.”