Diversified Gas & Oil buys gas producing assets in US for $400m

Diversified Gas and Oil has closed the acquisition of certain gas producing assets in Pennsylvania and West Virginia in the US in a $400m transaction.

The mature, unconventional assets were acquired from HG Energy II Appalachia, an affiliate of natural gas producer HG Energy.

Diversified reached an agreement last month with HG Energy to purchase these assets, which complement its existing asset base across the Appalachian Basin.

The transaction is in line with Diversified’s strategy of acquiring stable, long-life, low-decline producing assets in a focused region.

The acquisition comprises 107 gross producing wells with a combined net daily production of more than 20,000 barrels of oil equivalent (boe) and related surface rights.

As a result of the deal, the company’s pro-forma net daily production has increased by 30% to more than 90,000boe.

Diversified Gas and Oil CEO Rusty Huston said: “This acquisition is yet another transformative transaction consistent with our ambitious and proven growth strategy.

“The HG Energy Acquisition firmly establishes Diversified as a top-tier London-listed producer, supported by a solid balance sheet, a strong cash flow profile and a healthy dividend yield. We now turn our attention to the seamless integration of these assets into our smarter well management programme.”

According to the firm, the transaction is immediately accretive on earnings and free cash flow through top-line revenue growth and reduction of operating expenses.

Besides increasing Diversified’s operating scale, the newly acquired wells will help optimise operations.

The exploration company funded the deal through the completion of a $234m secondary equity offering and its existing credit facility.

Last July, Diversified purchased EQT’s southern Appalachian producing gas and oil and midstream assets.