LONDON (Alliance News) - Diversified Gas & Oil PLC on Friday announced a 15-year well agreement with the Commonwealth of Pennsylvania, its fourth such deals in the US.
Under the agreement, DGO will plug a minimum of 20 wells a year for the 15-year term, and will either return to production or plug a further 30 wells.
If during any year the company plugs or returns more wells than it has to, it can carry forward activity as a credit for future annual requirements.
DGO will post a USD7 million bond with Pennsylvania's Department of Environment Protection within 30 days of the agreement becoming effective.
DGO has 23,000 wells in Pennsylvania, and the agreement follows similar ones signed in the US states of Ohio, West Virginia, and Kentucky.
DGO's Chief Executive Rusty Hutson said: "This long-term agreement is significant for DGO and clarifies our asset retirement obligations within Pennsylvania where we operate approximately 40% of our wells.
"We are pleased this process is complete and that we have accomplished our strategy to formalize agreements with each of the principal States in which we operate including Ohio, Kentucky, West Virginia and Pennsylvania."
"We now have formal, multi-year agreements covering virtually all of the wells we operate, which provides us with clear asset retirement parameters within which we can budget comfortably from the stable operating cash flows we generate from approximately 70,000 barrels of daily oil equivalency production," Hutson continued.
Shares were 4.3% higher on Friday morning in London at 109.50 pence each.
