Diversified Gas & Oil PLC (ISE:DGOC)

Diversified Gas & Oil PLC (ISE:DGOC)


Share Price
113.50 p
Change
-1 (-0.87 %)
Market Cap
£7.67 m
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Diversified Gas & Oil PLC

Diversified Gas & Oil PLC (DGO) is an established,  independent owner and operator of producing natural gas & oil wells concentrated in the Appalachian Basin in the United States. Our field operations are densely located throughout the neighboring states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, and Maryland, where we are one of the largest independent...

EPIC: DGOC
Market: ISE:DGOC
FRA:DG2
52-week High/Low: 135.000p / 99.000p
Sector: Oil & Gas
Market Cap: £7.67 m
Website: www.diversifiedgasandoil.com
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Big Picture – A Deep Dive Examination of Diversified Gas & Oil PLC


Diversified Gas & Oil PLC Snapshot

Our strategy - Acquire, produce, drill

Our goal is to acquire and manage our oil and natural gas properties to generate cash flows, and provide stability and growth for the long-term benefit of our investors and employees.

Target PDP acquisitions

Capitalise on the opportunity to acquire complementary producing conventional oil and gas assets in the Appalachian Basin from industry players who are seeking to focus resources on shale reservoirs. Our target assets are characterised by predictable production rates, long-life (50+ years), and low decline rates.

Maximise Production

Our goal is to maximise production from our portfolio through the deployment of rigorous field management programmes and accelerating or extending production by deploying new extraction technology and/or refreshing decayed infrastructure on poorly maintained wells. Through operational and cost efficiencies, we have demonstrated our ability to maximise value by enhancing production whilst lowering costs, resulting in low operating costs of below $10.00 per boe.

Through operational and cost efficiencies, we have demonstrated our ability to maximise value by enhancing production whilst lowering costs.

As a result of our focus on conventional shallow formations, our wells are low cost and operationally low risk, ensuring we retain strict control of drilling and completion costs.

Execute low-risk, low cost drilling

DGO’s vast portfolio is comprised of over 1 million leasehold acres and provides a significant opportunity to grow the Company, when it becomes more economically viable, through infill drilling activities. As a result of our focus on conventional shallow formations, our wells are low cost and operationally low risk, ensuring we retain strict control of drilling and completion costs. DGO can activate a low-risk development programme in a favourable commodity pricing environment that ensures a quick return on investment.

Operations overiew

Diversified Gas & Oil is focused on the Appalachian Basin in the north-east US

Diversified Gas & Oil is focused on the Appalachian Basin in the north-east US. The basin is the oldest hydrocarbon producing region in the United States having established the first oil production in 1859. It is also home to the prolific Marcellus and Utica shale plays, as well as conventional sandstone reservoirs, and the region generates approximately one third of US’s domestic natural gas supply. Over 1 million wells have been drilled on the Appalachian Basin with an exceptionally high industry success rate. As an established producing basin, the region benefits from an abundance of infrastructure enabling an easy route to market for our products.

DGO operates approximately 7,500 wells across a substantial land bank of over 1 million acres of conventional leaseholds in the Appalachian Basin. The Company’s daily production at December 2016 stood at 4,700 barrels of oil equivalent per day, comprised of approximately 26,000 mcf per day of natural gas and 475 barrels of oil per day.

n 2016, DGO engaged Wright & Company, a US based independent reserve auditor, to produce a Competent Persons Report (CPR). The independent findings identified Total Proved (1P) Reserves of 27.9 mboe (153,695MMcf and 2.3mmbbl), 86% of which are classified as Proved Developed Producing (PDP).

 

Our assets

Low-risk, low-cost, long-life

Our conventional gas and oil assets produce from shallow depth, vertical wells into low permeability reservoirs sitting above the prolific Marcellus and Utica shale plays of the Appalachian Basin.

The mature wells show low decline rates averaging only 3-5% per annum, with little water content, resulting in long average well life of +50 years enabling DGO a high quality and reliable stream of free cash flow. The mature wells also benefit from simple and low-cost maintenance operations and require low ongoing capex.

Since inception, DGO has drilled 150 wells across its portfolio, none of which have been dry holes. The vast size of the land bank means that the assets have only been sparsely drilled presenting an infill drilling opportunity that DGO will seek to exploit in a higher commodity price environment. As the wells are onshore and shallow, development wells are relatively cheap and quick to drill.

DGO’s strict focus on cost controls, maintained through a combination of labour and cost efficiencies, ensures we maintain low-cost operations, thereby maximising profitability and enabling the company to generate free cash flow in a low commodity price environment.

In 2016, DGO delivered an average low operating cost of $9.53 per barrel, and believe this can be reduced further as the company achieves scale through consolidation.

Robert “Rusty” R Hutson Jr.
Chief Executive Officer

Mr Hutson Jr. is the fourth generation of his family to be involved in the oil and gas industry but the first to hold an executive role, with his Father, Grandfather and Great Grandfather all working in various field operational roles. Before founding Diversified Gas & Oil in 2001, Mr. Hutson Jr. held finance and accounting roles for 13 years at Bank One (Columbus, Ohio) and Compass Bank (Birmingham, Alabama). He finished his banking career as CFO of Compass Financial Services. Mr. Hutson has a B.S. degree in Accounting from Fairmont State College – West Virginia. He is a former certified public accountant (“CPA”) (Ohio).

 

Bradley G Gray
Finance Director and US Chief Operating Officer

Prior to joining the Company in October 2016, Mr. Gray held the position of Senior Vice President and Chief Financial Officer for Royal Cup, Inc., a United States based commercial coffee roaster and wholesale distributor of tea and other beverage related products. Prior to Royal Cup, Inc., from 2006 to 2014, Mr. Gray worked in the petroleum distribution industry for The McPherson Companies, Inc. and held the position of Executive Vice President and Chief Financial Officer. Additionally, from 1997 to 2006, Mr. Gray worked in various financial and operational roles with Saks Incorporated, a previously listed New York Stock Exchange retail group in the United States. Mr Gray began his career at Arthur Andersen. Mr. Gray has a B.S. degree in Accounting from the University of Alabama and he is a licensed CPA (Alabama).

 

Robert (“Rusty”) Hutson, Sr.
Field Operations Manager

Rusty Hutson, Senior., spent over 30 years in the oil and gas business in various operational roles for oil and gas operators. The Hutson family has been engaged in aspects of the oil and gas industry in West Virginia, United States since the early 1900s. He now supervises the West Virginia operations for the Group.

 

Tim Altier
Production Manager – Ohio

Tim Altier is the third generation in his family to work in the oil and gas industry. Mr. Altier started his career at Dominion East Ohio where he worked in the engineering and metering division. He spent 16 years as the Operations Manager at Range Resources and their predecessors with responsibility for all their wells and production in Ohio and New York. After Range sold their Ohio and New York production, Mr. Altier moved to Mountaineer Keystone as Production Manager where he worked with Utica and Marcellus production. Mr. Altier left Mountaineer Keystone to become the Conventional Production Manager of Eclipse Resources in Ohio. Mr. Altier joined the Group as Production Manager for all of the Group’s operations in the state of Ohio upon its acquisition of Eclipse. Mr. Altier has a Petroleum Engineering Degree from Marietta College in Marietta, Ohio and also received his Master’s Degree in Petroleum Engineering from West Virginia University in Morgantown, West Virginia.

 

Drew Adamo
Production Manager – Pennsylvania

Mr. Adamo started his career in 1986 with Victory Energy Corporation as a well tender, spending 10 years learning well tending and compressor operations. In 1996, Mr. Adamo moved to Texas Keystone Inc (“TKI”) spending 20 years growing from well tending to management. Mr. Adamo managed all of TKI’s field operations in Pennsylvania and West Virginia, consisting of drilling, completing and pipelining over 1,500 conventional gas wells. Mr. Adamo’s 30 years of experience in the oil & gas industry has grown his extensive knowledge of all facets of conventional field operations, specialising in engineering and setting large horsepower compression. Mr. Adamo joined the Group upon its acquisition of the TKI conventional assets, as Production Manager for all of the Group’s operations in the state of Pennsylvania.

 

Lindsey S Pourciau
Treasury and Financial Controller

Lindsey joined the Group in 2011 and is responsible for financial statement and budget preparation, monthly closing procedures and audit & tax oversight. Prior to joining the Group, Lindsey was a Senior Accountant with Barfield, Murphy, Shank & Smith where she audited construction contractors, manufacturing and distribution companies. She has a Master of Accountancy and a B.S. in Accounting from Samford University and she is a licensed CPA (Alabama).

Significant Shareholders

As of 24 April 2019, the Company is aware of the following persons who hold, directly or indirectly, voting rights representing 3% or more of the Company's issued share capital

SHAREHOLDER NUMBER OF 
ORDINARY SHARES
% OF ISSUED 
SHARE CAPITAL
Sand Grove Capital Management LLP 69,362,501 9.99%
HSBC Bank PLC 63,443,725 9.14%
Pelham Capital Ltd. 40,086,732 5.77%
AXA Investment Managers 36,467,779 5.25%
JO Hambro Capital Management Ltd 34,858,503 5.02%
Premier Fund Managers 29,090,088 4.19%
Standard Life Aberdeen plc 28,126,268 4.05%
GLG Partners 23,221,326 3.35%
Caius Capital LLP 22,268,024 3.21%

 

Corporate Headquarters
Diversified Gas & Oil PLC
1800 Corporate Drive
Birmingham, Alabama 35242
USA
T: 1-205-408-0909
F: 1-205-408-0870

Field Office
Diversified Gas & Oil
4150 Belden Village St. NW
Suite 401
Canton, OH 44718
USA

Field Office
Diversified Gas & Oil
414 Summers Street
Charleston, WV 25301
USA

Owner Relations
See Royalty Owners to see the most current contact information

Investor Relations
Teresa B. Odom, IR Vice President
[email protected]

Company Secretary
MSP Secretaries LTD
27/28 Eastcastle Street
London W1W 8DH

Registered Office
27/28 Eastcastle Street
London, W1W 8DH

Share Registrar
ComputerShare
The Pavilions, Bridgwater Road
Bristol, BS13 8AE
T: +44 (0)370 702 0003

Transfer Agent
ComputerShare
The Pavilions, Bridgwater Road
Bristol, BS13 8AE
T: +44 (0)370 702 0003

Corporate Marketing Firm
Buchanan
Ben Romney / Chris Judd
107 Cheapside
London, EC2V 6DN
T: +44 (0)207 466 5000
[email protected]

Auditor
Crowe U.K. LLP
St Bride’s House, 10 Salisbury Square
London, EC4Y 8EH

Legal Counsel

Legal Advisor to the Company (UK)

Wedlake Bell LLP
71 Queen Victoria Street
London EC4V 4AY

Legal Advisor to the Company (USA)
Maynard Cooper & Gale
1901 Sixth Avenue North
Suite 2400
Birmingham, AL 35203

Land Management
[email protected]
Fax: 1 (330) 339-5825

Vendors
[email protected]

Nominated Adviser
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London, EC2R 7AS

Joint Broker
Mirabaud Securities LLP
10 Bressenden Place
London, SW1E SDH

Joint Broker
Stifel Nicolaus Europe Limited
150 Cheapside
London, EC2V 6ET

Legal Advisor to the Company (UK)
Wedlake Bell LLP
71 Queen Victoria Street
London, EC4V 4AY

Legal Advisor to the Company (USA)
Maynard Cooper & Gale
1901 Sixth Avenue North
Suite 2400
Birmingham, Alabama 35203

Auditors and Reporting Accountant
Crowe U.K. LLP
St Bride's House
10 Salisbury Square
London, EC4Y 8EH

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