NEWS & MEDIA

Further acquisitions continue to prove positive for Diversified Gas & Oil PLC

11 July 2018

Diversified Gas & Oil PLC (DGOC) last week announced a finalised agreement that will see the company acquire entities that hold gas and oil assets of EQT Corporation, valued at US$575 million (GBP£435.8 million). The acquisition of production assets will allow the group’s operational footprint in Appalachian, US to grow and has been funded through an extension to its existing loan facility and placing of shares.

195,330,000 ordinary shares were issued at 97p to raise US$250 million. The uplift in 2017 EBITDA is estimated to be approximately 289% and will have an immediate increase to cash and earnings. At the time of placing of the new shares, DGOC’s market cap is expected to be approximately US$648.7million (GBP£491.6 million).

Speaking on the acquisition and placing, CEO of Diversified Gas and Oil PLC, Rusty Huston said, “Since our admission to AIM in February of last year, we have grown the company rapidly through a series of transformative acquisitions to become the largest produced on AIM. This transaction is yet another game-changer for us as we double our production once again to become one of the largest producers in the London market.”

Earlier in the year, DGOC also announced that it had secured a new banking facility of up to $1 billion from KeyBank National Association and a syndicate of lenders, this is being used to partly fund the acquisition and has also given them annual savings of US$11.5 million in interest alone. The five-year senior secured a revolving credit facility, with interest at LIBOR +2.5% compared with previous LIBOR +8.25%; to be provided by KeyBank National Association.

Adding to the announcement, Diversified Gas and Oil CEO Rusty Huston added, “We look forward to completing the acquisition of these assets, integrating and optimising them within our existing portfolio, and leveraging our vastly increased financial profile to deliver reliable and sustainable returns to our shareholders through our proven dividend model.”

From the acquisition and placing, the interim dividend of 1.725 cents in respect of the first quarter to 31 March 2018 announced by the Company on 29 May 2018, will be paid on 24 September 2018 to those Shareholders on the register on 13 July 2018.

Speaking of the acquisition, Rob Wiegold from Shard Capital Stockbrokers commented, “Assuming approval is received at the GM on the 16th July, acquiring these assets at around a 4x EBITDA multiple versus their current rating of a 7.9x looks to be a very good move. It is highly accretive, adding $140m of EBITDA which is an uplift of approximately 290%. On the assumption that they maintain their existing dividend policy, at the 97p placing price DGOC with be yielding around 8.5%. The shares reacted very well to this deal and have increase circa 28% since trading resumed, even with the price increase they will still be yielding over 6.5% which we believe will be an attractive prospect to many income focused investors.”

For more information on Diversified Gas and Oil PLC and share opportunities, please contact Shard Capital Stockbrokers on 0207 186 9950 / scsb@shardcapital.com.

 

Important investment information : The views above are published solely for information purposes and are not to be construed as a solicitation or an offer to buy or sell any securities, or related financial instruments. It does not constitute advice or a personal recommendation as defined by the Financial Conduct Authority (“FCA”) or take into account the particular investment objectives, financial situations or needs of individual investors. These views are based on public information and sources considered reliable. Past performance is not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments can fall as well as rise, therefore you could get back less than you invest. If you are unsure about the appropriateness of an investment for your circumstances please seek independent financial advice. Investors should form their own view on any proposed investment. This publication has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Figures correct as at 6 July 2018 unless otherwise stated. This publication is issued by Shard Capital Partners LLP, 20 Fenchurch Street, London, EC3M 3BY United Kingdom who are authorised and regulated by the Financial Conduct Authority.