Diversified Gas and Oil (DGO) has signed binding agreements to acquire two separate packages of natural gas gathering systems in Pennsylvania and West Virginia in the US from Dominion Gathering and Processing, and Equitrans.
The assets will be acquired in a $7.5m deal and comprise 1,700 miles of gas-gathering pipelines alongside compressors, measuring stations and associated infrastructure.
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They currently deliver approximately 109,000MMBtu of natural gas a day, nearly 60% of which comes from DGO production operations, with third parties producing the remaining 40% volumes.
DGO expects that the deal would increase third-party midstream revenues by more than $3m a year and believes that it will eliminate the risk for future rate increases to move gas on the systems.
The acquisition will also enable the company to control the flow of production, thereby, increasing optionality to re-route gas to sales points with higher cash margins.
DGO CEO Rusty Hutson said: “In keeping with DGO’s growth strategy, we have capitalised on the opportunity to acquire what has become non-core assets for these sellers.
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By GlobalData“These small yet strategically complementary bolt-on acquisitions will add scale to our midstream capabilities and provide a high level of optionality with regards to both routes to market and improved pricing.
“These acquisitions further diversify our operations and revenue streams and strengthen our long-term ability to control costs and protect margins.”
In April, DGO closed the acquisition of certain gas producing assets in Pennsylvania and West Virginia in a $400m transaction. The agreement related to this transaction was initially signed in March.
