Diversified Gas & Oil plc, an acquisitive producer with assets in the Appalachian Basin, is launching a US$60mln IPO in London to fund plans for its next leg of expansion.
The Alabama headquartered group profitably produces some 4,400 barrels oil equivalent per day from fields in Ohio, Pennsylvania and West Virginia.
Currently, the portfolio comprises just shy of 30mln barrels of reserves. The group says it has a pipeline of acquisition opportunities, and the injection of capital from London investors can support its growth.
“There is a strong pipeline of similar assets available to us,” said Rusty Hutson, the founder and chief executive Diversified Gas & Oil.
He added: “… we intend to capitalise on these opportunities to create additional value and to secure long term positive cash flows for the benefit of DGO’s shareholders.”
Diversified Gas & Oil’s assets are conventional hydrocarbons, not shale, and significantly, with an average operating cost equating to US$9.53 per barrel this output is profitable in the current oil price environment. Revenue for the six months, ended June 30, amounted to US$7.6mln from a total of 428,522 barrels.
The company says it will generate significant cash flows from its producing assets and it will establish a progressive dividend policy. A maiden dividend is proposed for the year to end December 31.
It plans to be acquisitive, noting that after the equity funding it will be well positioned to acquire new assets and that it has a strong pipeline of acquisition opportunities.
Acquisitions building the business to this point have been funded by debt. The group presently has total borrowings of US$42.5mln, though it says that the London IPO would strengthen its balance sheet.
Hutson added: “We believe that the timing and appetite for our investment story is strong.
“We are not reliant on speculative resource exploration or development but offer investors exposure to a sound, profitable dividend-paying play on the US energy market.”
Story by ProactiveInvestors