Wednesday, September 4, 2019

Diversified Acquires Ohio Utica Assets from EdgeMarc

From a press release:
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 announce that the asset purchase agreement with EdgeMarc Energy Holdings, LLC, and certain of its subsidiaries, ("EdgeMarc" or the "Seller") as announced on 25 July 2019 (the "Acquisition") has been approved by the Seller and the United States Bankruptcy Court. Accordingly, subject to satisfaction of certain remaining closing conditions, DGO will acquire EdgeMarc's natural gas development, production and exploration assets for a total cash consideration of $50 million (subject to customary purchase price adjustments). The assets to be acquired include 12 gross producing unconventional Utica natural gas wells and related facilities (the "Assets") in Monroe and Washington counties within the State of Ohio, as well as certain undeveloped lands containing deep Utica rights.

Acquisition Highlights:

· Current production (~99% gas) of approximately 46 MMcfe per day (~7.7 MBoepd)1
· Purchase price represents a multiple of less than 3x projected cash flow
· Proved-Developed-Producing ("PDP") reserves of approximately 13.5 MMBoe valued at approximately $58 million on a PV10 basis2 (unhedged)
· Purchase price (gross) equates to an approximate PV14 value on only the PDP reserves
· Low Base LOE4 of $1.56/Boe ($0.26/Mcfe), which is 59% lower than DGO's consolidated rate at 30 June 2019
· No incremental administrative expense required
· Production has direct access to multiple interstate pipelines with the potential for higher realised pricing
· High average working interest and net revenue interests approximating 99% and 79%, respectively
· Wells require no near-term maintenance capital expenditures
· Three Drilled-and-Uncompleted ("DUC") wells valued at approximately $14 million in aggregate on a PV10 basis2, net of future completion costs3 - DGO has allocated no purchase price value to the DUCs and will explore monetisation options to effectively further reduce the net purchase price of the PDP reserves
· DGO to acquire EdgeMarc's 2019 and 2020 natural gas financial hedge book for additional consideration of approximately $2.0 million
· Acquisition consideration to be funded from existing debt facilities resulting in net debt-to-Adjusted EBITDA of approximately 2.1x
· Target completion date of mid-September with an effective date of 1 August 2019
Read the entire release by clicking here. 

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