DGO divests undeveloped wells and acreage from EdgeMarc acquisition

Natural gas and oil well operator Diversified Gas & Oil (DGO) has announced the sale of its non-producing assets recently acquired in Monroe County, Ohio, US, for $10m in cash.

The acquired assets include three drilled-and-uncompleted (DUC) wells, which were proven to be undeveloped wells, as well as certain undeveloped acreage comprising additional Utica drilling locations.

DGO noted that the assets under the sale were acquired from EdgeMarc Energy in September.

Divestment of these assets enables DGO to reduce its net investment in the 12 unconventional Utica natural gas production wells, acquired as part of the same transaction, to approximately $38m.

This represents more than 20% less than the original $50m purchase price.

At the same time, the company’s investment in the acquired producing wells fell from more than three times the projected cash flows to less than 2.5 times, which, according to the company, improves an approximate PV14 value paid to a projected PV24 value.

DGO CEO Rusty Hutson said: “Consistent with our track record of allocating value only to producing assets, and in line with our previously stated intentions to achieve maximum benefit from the non-producing assets, I am pleased to enhance the value of our recent acquisition of the 12 producing Utica wells from EdgeMarc by successfully monetising these assets.

“The sale demonstrates our ability to remain focused on our strategy of efficiently managing our producing assets while moving quickly to extract value from assets better suited in another’s portfolio.

“These proceeds allow us to incrementally reduce borrowings on our credit facility thereby providing liquidity for the various opportunities we routinely evaluate as we seek to continue our strategy of acquiring and optimising producing wells.”