(Alliance News) - Diversified Gas & Oil PLC on Monday reported "resilient" trading against both a challenging industry backdrop and the "extraordinary" impact of the Covid-19 pandemic.
The Birmingham, Alabama-based oil & gas producer's 2020 revenue fell 13% to USD409.7 million from USD462.3 million in 2019. This was due to lower prices achieved in 2020, partly offset by higher production from the assets it acquired in May 2020, with Carbon Energy Corp bought for USD110 million and EQT Corp for USD125 million.
Diversified reported a swing to a 2020 pretax loss of USD136.7 million from a USD131.5 million profit in 2019.
It noted a USD239 million non-cash charge in its earnings, which represents the change in fair value of its entire unsettled hedge portfolio from the end of 2019 to the end of 2020. The non-cash valuation charge primarily relates to higher prices on the forward price curve for natural gas, Diversified added.
Hedge adjusted earnings before interest, tax, depreciation and amortisation rose 10% to USD301 million from USD273 million.
The company said it achieved a record full-year daily net production of 100,000 barrels of oil equivalent per day, up 18% from 2019's 85,000 boepd. This increase was helped by Diversified's acquisition of the Carbon and EQT assets last year. Its December exit rate was 103,000 boepd, up from 95,000 at the end of 2019.
Diversified said it is recommending a fourth quarter dividend of USD0.0400 per share, which would make its total 2020 dividend USD0.1425 per share, an increase of 5% from USD0.1362 in 2019.
Shares in Diversified Gas & Oil were down 0.3% at 127.60 pence in London on Monday.
"I am exceptionally pleased with our results in 2020 as they reflect the resilience of our business model and its proven ability to consistently deliver shareholder value and returns, even in the most challenging of markets. Our commitment to value-accretive growth, operational excellence, cost discipline, and risk mitigation drove the group's solid performance through turbulent times. Our long-standing strategy of focusing on low-risk assets and reliable cash flows position Diversified for further growth, and enables us to maintain our firm commitment to shareholder returns, evidenced by the increase in our per-share dividend, which we raised twice, or 14%, during the year," said Chief Executive Rusty Hutson.
Looking ahead, Diversified said it enters 2021 with optimism underpinned by past success, lean operating costs, solid financial footing and an enhanced platform.
Diversified was promoted to the FTSE 250 index back in September.
"The positive fundamentals and outlook for US natural gas are creating a supportive tailwind, which gives us confidence in our ability to sustain our dividend and create value for our stakeholders," said Hutson.
By Zoe Wickens; zoewickens@alliancenews.com
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