(Alliance News) - Diversified Gas & Oil PLC said Tuesday it has raised USD85.8 million through a placing and subscription of shares, which will go towards funding the acquisition of midstream and upstream assets in the US.
The US-focused oil & gas firm said it has issued 64.3 million shares at a price of 108 pence per share, a price equal to a 1.6% discount to Monday's closing price at 109.80p.
Shares in Diversified Gas & Oil were down 1.7% at 107.98 pence on Tuesday in London.
Stifel Nicolaus Europe Ltd, Mirabaud Securities Ltd and Credit Suisse Securities Europe Ltd acted as joint global coordinators and bookrunners for the bookbuild process.
On Monday, the group said it had signed a conditional agreement with US natural gas producer EQT Corp for for the acquisition of certain upstream and midstream assets.
The agreement is for the group to acquire 900 net operated wells, with net production of 9,000 barrels of oil equivalent per day in 2019, of which the entirety was natural gas.
This is in conjunction with an agreement signed with Carbon Energy Corp in early April, for Diversified Gas & Oil to acquire 6,100 net conventional wells in Tennessee, Kentucky and West Virginia, 4,700 miles of intrastate gathering pipeline and two natural gas storage fields with 3.5 billion cubic feet in capacity.
The collective consideration for the acquisition is an initial USD235 million, with USD125 million for the EQT deal and USD110 million for the Carbon deal.
There is also the potential contingent consideration of USD35 million to be paid over three years based on certain pricing targets should commodity prices rise.
The acquisitions remain subject to several conditions, including due diligence and regulatory approval.
The remaining funding for the acquisitions will come from a new USD160 million to USD165 million long-term amortising senior secured term loan, which is expected to have a ten-year maturity and 6.50% coupon.
"The completion of this fundraise, against the challenging economic and industry backdrop, reflects the unique proposition of DGO and the support that we have for our continued growth and value creation ambitions. Our investment story is centered on low-risk cash flow and a commitment to shareholder returns, and our business model ensures we are able to deliver both, even in the current low commodity price environment," said Chief Executive Officer Rusty Hutson.
Diversified Gas & Oil now has 707.1 million shares issued overall.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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