Diversified Gas & Oil PLC – Main Market and Corporate Update

Diversified Gas & Oil PLC – Main Market and Corporate Update

Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids and oil wells as well as midstream assets, is pleased to provide the following update. 

Proposed Move to Main Market

The Board is pleased to confirm that following its robust evaluation of the matter, the Company is formally pursuing a move to the Premium segment of the Main Market of the London Stock Exchange, which it expects to complete following the publication of its full-year results issued in Q1 2020, subject to the approval of the UK’s Financial Conduct Authority. The Company will announce further details as appropriate.  

Change of Auditor

Aligned with the Company’s desire to move to the Main Market, DGO began a formal tender process in February 2019 to identify a “Big Four” accounting and auditing firm to conduct its annual financial audit requirements commencing with the fiscal year ending 31 December 2020.  Through this rigorous tender process DGO has identified, and its Audit Committee has approved, a preferred Big Four audit firm with whom it is currently completing final diligence. The Company expects to announce details of the audit firm once diligence is complete.  Subject to the appointment of a new audit firm, Crowe UK LLP will serve as auditor of the Company through the completion of the 31 December 2019 Audit.

Governance Initiatives

In addition, DGO is undertaking a full review of all aspects of its corporate governance to ensure its structure and practices are in accordance with the standards expected of a Premium Listed company. Recognising the importance to stakeholders and the correlation to shareholder value and good corporate citizenship, the Company has engaged external consultants to advise on best practices including Board independence, composition and diversity and the effective rollout of its upgraded ESG programme. 

Acquisitions Update

The Company confirms that the acquisition of assets from EdgeMarc Energy Holdings announced on 29 August 2019 is proceeding as planned and is expected to close on or around 17 September 2019. Similarly, DGO’s acquisitions of natural gas gathering systems from Dominion Gathering & Processing and from Equitrans, for an aggregate cash consideration of $7.5 million, announced on 27 August 2019, are proceeding as planned. The Company expects to close on both gathering system acquisitions in late September 2019. The combined $59.5 million purchase price of these assets (including EdgeMarc’s hedge book) will be funded with a draw on the Company’s revolving bank credit facility.  

Closely aligned with the closing of these acquisitions, the Company confirms the expiration of Stifel Nicolaus Europe Limited’s autonomous repurchase authority under the Company’s 12-month buyback programme (the “Programme”) on 11 September 2019. Accordingly, discretionary repurchases under the Company’s existing buyback authorities return to DGO.  

Since inception of the Programme in April 2019, DGO has repurchased approximately 34 million ordinary shares (from a maximum limit of 54,265,394 ordinary shares) representing nearly 5% of the pre-buyback ordinary shares outstanding for an average price of 109p per ordinary share, or approximately $47 million in total. Reflective of the Company’s commitment to maintain a healthy balance sheet with low leverage to cash flow, DGO will resume using its excess cash flow, after dividends, to pay down its revolving credit facility. The Company will continue to evaluate additional share buybacks at its discretion, under its existing buyback authorities.  

Rusty Hutson, Jr., CEO of the Company, commented:

“I am excited to announce we are officially progressing plans to pursue a move to the Main Market of the London Stock Exchange.  Our proposed move to the Main Market reflects the significant, successful growth of DGO since our February 2017 AIM IPO, and further demonstrates our Board’s ambitions and commitment to continued enhancement of the Company’s governance structure for the benefit of all our stakeholders. We also continue progressing towards closing later this month several previously announced margin-enhancing acquisitions. With these additional debt-funded acquisitions in hand, we return our focus to de-levering the balance sheet to ensure we maintain strong liquidity.”

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