Diversified Gas and Oil makes a splash in the oil pool with $400m deal for US wells
London-listed Diversified Gas and Oil completed its second biggest ever deal yesterday, announcing it will buy 107 gas wells in Pennsylvania and West Virginia for $400m (£302m).
The deal is set to boost Diversified’s daily production by 20,000 barrels of oil equivalent.
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It brings total output to around 90,000 barrels per day on a pro forma basis, the company said.
The deal give Diversified a lot fewer wells than past purchases, however there are “significantly higher volumes per well than our previous acquisitions,” said chief executive Rusty Hutson.
The wells also fetch a higher price for their gas, helping Diversified reduce operating costs and drive up margins.
He added: “With an estimated net average production of over 90,000 barrels of oil equivalent per day post completion, the company will be established in the top-tier of London listed producers, supported by an extremely strong cash flow profile and a healthy balance sheet.”
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The firm also said yesterday it will go to shareholders to raise $225m to fund the deal for the wells, located close to others in its portfolio.
“We look forward to completing this transaction so we can turn our focus towards integration, an area of expertise that DGO continues to enhance with each acquisition that we complete,” Hutson said.