US-based gas and oil producer Diversified Gas & Oil has agreed to acquire a network of gas and oil producing assets in the Appalachian Basin for approximately $575m.
Image: Diversified Gas & Oil intends to acquire oil and gas assets. Photo: Photo by Zbynek Burival on Unsplash.
Under the terms of the agreement, Diversified Gas & Oil will acquire approximately 11,350 wells with current net total gas production of 32.1 Mboe/day.
The company said in a statement: “This will represent an increase in the net daily production of approximately 114% over the Company’s daily production levels as at 31 March 2018.
“The Acquisition is expected to be immediately earnings accretive. The pro forma uplift in 2017 EBITDA is estimated to be approximately 289%.”
Diversified Gas & Oil said that the deal will include a significant extension to its existing pipelines and network of compression stations.
Upon completion of the transaction, the company’s total net acreage under lease is expected to increase to 6.5 million acres from 4.0 million acres while proven developed producing reserves (PDP) will increase by 142% to 393 mmboe from the current 163 mmboe.
Diversified Gas & Oil plans to fund the deal through a new $1bn debt facility and a $225m worth of share sale.
Earlier this year, Diversified Gas & Oil has acquired Alliance Petroleum and CNX Resources, bolstering its Appalachian Basin operations by increasing production capacity by nearly 175%.
The firm said that acquisitions increase its total proved developed producing reserves by nearly 220% to 173 million boe from 55 million boe.
At that time, Diversified Gas & Oil CEO and founder Rusty Hutson said: “We continue to evaluate similar acquisition opportunities in the Basin, targeting mature producing wells that allow us to return cash to shareholders through a regular dividend.”
Diversified Gas & Oil is engaged in acquiring and operating oil- and gas-producing assets in the Appalachian Basin of the US. It currently operates approximately 18,000 producing wells.