Diversified Gas and Oil has signed an agreement to acquire a number of producing gas assets in the US states of Pennsylvania and West Virginia from HG Energy for $400m.
Under the conditional sale and purchase agreement, Diversified Gas and Oil will acquire 107 unconventional producing gas wells with a combined net daily production of more than 20,000boe.
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The wells are located close to the company’s existing operations in the Appalachian Basin.
Diversified Gas and Oil also announced a proposed placing of shares via an accelerated bookbuild to raise at least $225m to fund the deal.
The company will also fund the acquisition using a combination of a drawdown from its existing KeyBank facility.
Diversified Gas and Oil CEO Rusty Hutson said: “This package comprises significantly higher volumes per well than our previous acquisitions and achieves 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.
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By GlobalData“With an estimated net average production of over 90,000boed 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.”
Upon completion, the pro forma net production is expected to increase to more than 90,000boed and PDP reserves to 566mmboe.
Last July, Diversified Gas & Oil completed the $575m acquisition of EQT’s producing gas and oil and midstream assets in the southern Appalachian Basin in the US.
