Diversified Gas & Oil PLC Operational Update (1921Z)
May 16 2019 - 2:01AM
UK Regulatory
TIDMDGOC
RNS Number : 1921Z
Diversified Gas & Oil PLC
16 May 2019
16 May 2019
DIVERSIFIED GAS & OIL PLC
("Diversified", "DGO" or the "Company")
Operating Update
Diversified Gas & Oil plc (AIM: DGOC), the US-based owner
and producer of gas and oil wells and operator of midstream assets
in the Appalachian Basin, is pleased to announce the following
operational update.
Highlights
-- Q1 net production of approximately 69 thousand barrels of oil
per day (kboepd) in line with year-end production
-- April production exceeded 70 kboepd from existing assets and
over 90 kboepd including production from the HG Energy II
assets
-- Ongoing integration of HG Energy II wells into portfolio with
production in line with expectations, with net production over 20
kboepd at the end of April
-- Q1 adjusted EBITDA of $62 million (hedged), with margins of
approximately 55%, consistent with year-end margins
Operations and Well Integration Update
The Company's Smarter Well Management programme (the "SWM
Programme") continues to support strong production from the
Company's assets. Net production for the three months ended 31
March 2019 averaged approximately 69 kboepd, generally in line with
31 December 2018 year-end net production of approximately 70
kboepd. When adjusted for typical seasonal and weather-related
production curtailments, net average production delivered a
marginal increase in the period compared with year end production.
April net production from existing assets exceeded 70 kboepd and
further increased to over 90 kboepd inclusive of the recently
acquired HG Energy II assets.
In addition to optimising production from existing assets, DGO
is integrating the wells from HG Energy II acquisition (the
"Acquisition"), which closed in late April. The acquired wells are
producing in line with expectations and the seller-financed
compression projects previously disclosed are progressing to plan.
Enhanced compression on two producing pads in Pennsylvania, on
which 21 wells sit, increased net production from approximately 6.2
kboepd to approximately 8.4 kboepd, an increase of more than 35%
and consistent with the Company's expectations of the project.
Total net production from the acquired assets was over 20 kboepd by
the end of April, and DGO expects to complete the remaining
compression project this month.
Financial Update
Realized prices for the quarter were in line with expectations
as DGO continues to actively manage commodity price volatility
through its ongoing hedging program, providing for stable cash
flows. The Company's lease operating expenses per unit of
production remained in-line with the fourth quarter 2018 and
general and administrative expenses were constant. Despite lower
commodity prices and the winter weather-related production
curtailments, on an unhedged and hedged basis, adjusted EBITDA* in
the first quarter approximated $63 million and $62 million,
respectively, equating to margins of nearly 55%, consistent with
year-end margins of approximately 61% and 53%, respectively.
Strong margins translated into healthy cash flow of
approximately $47 million in debt reduction payments prior to the
March dividend payment and amounts escrowed for the Acquisition.
With the previously announced $225 million increase in the
Company's borrowing base available on its credit facility, DGO's
liquidity was enhanced and exceeds $330 million after drawing
approximate $160 million to close on the Acquisition. Net
debt-to-adjusted EBITDA* remained unchanged from year-end at
approximately 1.8x.
Rusty Hutson, Jr., CEO of Diversified commented, "The production
performance through the first quarter demonstrates the
effectiveness of our SWM Programme, and we continue to see plenty
of opportunities within our portfolio to organically grow
production through various field and well-level initiatives. The
hard-working members of Diversified's team who make the SWM
Programme a success are also now focused on overseeing the seamless
integration of the HG Energy assets, which is progressing well.
With strong cash flows from our producing and midstream assets and
current liquidity of over $330 million that increases monthly as we
utilize our free cash flow to paydown our revolver balance, we are
well positioned to respond to market dynamics and redeploy our
liquidity into the best opportunities for creating long-term
shareholder value."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* Adjusted EBITDA represents earnings before interest, taxes,
depletion, depreciation and amortization and adjustments for
non-recurring items such as gain on the sale of assets, acquisition
related expenses and integration costs, mark-to-market adjustments
related to the Company's hedge portfolio, non-cash equity
compensation charges and items of a similar nature.
Diversified Gas & Oil PLC
Rusty Hutson Jr., Chief Executive Officer
Brad Gray, Chief Operating Officer & Finance Director
Eric Williams, Chief Financial Officer
Teresa Odom, Vice President, Investor Relations
www.dgoc.com
ir@dgoc.com + 1 (205) 408 0909
Cenkos Securities plc
(Nominated Adviser)
Russell Cook
Katy Birkin
Ben Jeynes +44 (0)20 7397 8900
Mirabaud Securities Limited
(Joint Broker)
Peter Krens
Edward Haig-Thomas +44 (0)20 3167 7221
Stifel Nicolaus Europe Limited
(Joint Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield +44 (0)20 7710 7600
Buchanan
(Financial Public Relations)
Ben Romney
Chris Judd
James Husband
dgo@buchanan.uk.com +44 20 7466 5000
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END
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