Diversified Gas & Oil (DGO) has signed a letter of intent (LoI) to acquire gas and oil producing assets in the Appalachian Basin for a total cash consideration of $575m to strengthen its portfolio.
The proposed acquisition includes 11,350 wells with a current net total gas production of 32.1Mboe/day, allowing the company to enhance its net daily production by 114%.
According to DGO, the transaction is expected to be immediately earnings accretive, with earnings (EBITDA) set to increase by 289%, and expand its total net acreage under lease from four million acres to 6.5 million acres.
The company also expects the deal to result in a 142% rise of proven developed producing reserves (PDP) to 393mmboe from the existing 163mmboe, while also adding more infrastructure such as pipelines and compression stations.
The company will fund the transaction from a new $1bn debt facility with an initial borrowing base of $600m, of which $376m will be used for the acquisition.
Furthermore, DGO is planning to raise up to $225m through the placement of new ordinary shares.
In February, the company reached agreements to buy Alliance Petroleum and the conventional assets of CNX Resources for a total price of $180m to enhance Appalachian Basin operations and increase total net daily production by 175%.
For the year ending 31 December 2017, the company’s total revenue increased 144% to $41.8m from $17.1m in the previous year.
