DGOC.L Regulatory News (DGOC)

 14 June 2018

Diversified Gas & Oil PLC

("DGO" or the "Company")

Proposed Acquisition

Diversified Gas & Oil PLC (AIM: DGOC), a US based gas and oil producer, confirms that it has signed a non-binding letter of intent to acquire a network of further gas and oil producing assets in the Appalachian Basin (the "Acquisition") for a total cash consideration of approximately $575 million.

The assets to be acquired comprise approximately 11,350 wells with current net total gas production of 32.1 Mboe/day. This will represent an increase in the net daily production of approximately 114% over the Company's daily production levels as at 31 March 2018(1). The Acquisition is expected to be immediately earnings accretive. The pro forma uplift in 2017 EBITDA is estimated to be approximately 289%(2). Upon completion, DGO's total net acreage under lease will increase from 4.0 million acres to 6.5 million acres. Proven developed producing reserves (PDP) will increase by 142% to 393 mmboe from the current 163 mmboe. The Acquisition will include a significant extension to the Company's existing pipelines and network of compression stations.

The consideration will be met from a new debt facility of $1.0 billion with an initial borrowing base of $600 million, of which the Company will draw approximately $376 million for the Acquisition. In addition the Company is proposing to undertake a placing of new ordinary shares to raise up to $225 million.

If it proceeds, the Acquisition will constitute a reverse takeover in accordance with Rule 14 of the AIM Rules for Companies and will be subject to approval by Shareholders. Accordingly, at the Company's request, DGO's ordinary shares have been suspended from trading on AIM with immediate effect and will remain suspended until an AIM admission document has been published or until the Company confirms that the Acquisition is not proceeding.

The Directors emphasise that there can be no certainty that the Acquisition will proceed.

This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.

Notes:

(1) Net daily production as at 31 March 2018 is a pro forma figure over the first quarter of 2018 to include the Alliance Petroleum Corporation and CNX asset acquisitions that closed on 7 March 2018 and 29 March 2018, respectively, presented as if closed on 1 January 2018.

(2) Based on pro forma estimate of 2017 EBITDA, including full year contributions from the Alliance Petroleum Corporation and CNX asset acquisitions.