With the dust barely settled on its $180m (£135m) twin purchases of APC and CNX, Aim-listed Diversified Gas & Oil (DGOC) has returned to the Appalachian acquisition trail with a massive $575m deal.
This week, the low-cost driller signed a non-binding letter of intent to buy 11,350 producing mini-wells from an unnamed peer. The deal, which will be funded by a $225m share placing and the partial draw-down of a new $1bn debt facility, will more than double Diversified’s oil-equivalent current output and reserves, and – per the company – should lead to a near-quadrupling in cash profits.
What this is likely to mean for the bottom line, borrowings, dividend yield or operating expenses remains unclear at present. Assuming the deal goes ahead, management believe the acquisition will be “immediately earnings accretive”, though the purchase also includes “a significant extension” to the company's midstream assets, and offers no details on a likely equity placing price.
