(Alliance News) - Diversified Gas & Oil PLC has completed a USD200 million maiden financing, it said Thursday, as production increases from assets in the US.
The inaugural USD200 million securitised financing has been completed with a 5% coupon, a 10-year amortising note, and lasts for 17 years. It is secured by a 22% interest in some upstream asset cash flows, DGO said.
The financing has been handed a BBB- investment rating, which DGO said provides a better cost compared to unsecured bonds.
Chief Executive Rusty Hutson said: "Our new securitised financing structure provides DGO with access to a high-quality capital base and allows the company to diversify and enhance the duration of our debt capital structure while simultaneously enhancing liquidity.
"As an acquisitive growth company, the ability to fix attractive rates for a 10-year plus period on a portion of our debt while freeing capacity on our revolving credit facility is paramount to our continued success and demonstrates to sellers of assets our ability to transact."
On the operational front, DGO achieved a 10% quarter-on-quarter increase in production for the three months to September to 91,100 barrels of oil equivalent per day net to DGO. September production was 5% higher than June at 94,400 barrels per day.
Revenue for the period surged 43% year-on-year, with DGO realising an oil price 14% higher.
DGO's adjusted earnings before interest, tax, depreciation, and amortisation rose 28% year-on-year to USD64 million. The dividend yield is currently above 10%, it noted.
"The pace of activity at DGO has remained high during recent months as we've closed three additional margin-enhancing acquisitions and continue to fully integrate those upstream and midstream assets into our portfolio," said Hutson.
"Our smarter well management efforts continue to deliver outstanding results with production from our legacy assets at approximately 70,000 barrels of oil equivalent per day, nearly identical to the equivalent production 16 months ago and nearly 7% better than the expected performance of these wells over that period of time. Recognising the challenging commodity price environment in which we now operate, we understand now more-than-ever it is critical we actively manage the business to align our costs with our revenues."
"Accordingly, we have proactively taken steps to improve both while also increasing our efforts to better align our robust hedging programme, with our long-lived and stable asset base through longer tenor and enhanced structures. Collectively, these efforts position us to deliver stabilised cash flows, as seen in our ongoing strong cash margins in excess of 50%, and to make consistent distributions to our shareholders," he continued.
DGO shares were 1.0% higher on Thursday morning in London at 103.50 pence each.
By George Collard; georgecollard@alliancenews.com
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