LONDON (Alliance News) - Diversified Gas & Oil PLC on Wednesday said it has signed a conditional agreement to acquire a number of gas producing assets for USD400 million and intends to raise no less than USD225 million via placing to help fund the deal.
Included in the assets, which are to be acquired from HG Energy II Appalachia LLC, are 107 gas producing wells with a net daily production exceeding 20,000 barrels of oil equivalent. The wells are located near Diversified's existing operations in Pennsylvania and West Virginia.
The USD400 million acquisition will be funded through a drawdown of Diversified's existing loan facility and the net proceeds of the placing, which will take place by way of an accelerated bookbuild.
Mirabaud Securities Ltd and Stifel Nicolaus Europe Ltd will act as joint bookrunners for the placing, with the placing price to be determined after the bookbuild takes place.
Once the acquisition is complete, Diversified's pro forma net production will increase to more than 90,000 barrels of oil equivalent per day.
Diversified Chief Executive Rusty Hutson said: "These are high quality assets that are synergistically compatible with our existing portfolio in terms of profile and geography. This package comprises significantly higher volumes per well than our previous acquisitions and achieve higher realised gas prices, resulting in a positive impact for the overall economics of the enlarged portfolio as we continue to reduce operating costs and drive higher margins."
"With an estimated net average production of over 90,000 [barrels of oil equivalent per day] post completion, the company will be established in the top-tier of London listed producers, supported by an extremely strong cash flow profile and a healthy balance sheet. We look forward to completing this transaction so we can turn our focus towards integration, an area of expertise that [Diversified] continues to enhance with each acquisition that we complete. "
Shares in Diversified Gas & Oil closed down 1.3% at 117.00 pence on Wednesday.
