Diversified Gas & Oil

LN: DGOC

£603.1m market cap

119p last close

Diversified Gas & Oil is a conventional natural gas and oil producer with a main focus in the US onshore. The company possesses long-life, low operational cost, mature producing assets with slow decline profiles in the Appalachian region, in the states of Pennsylvania, West Virginia and Ohio.

Investment summary

Diversified Gas & Oil (DGO) is a natural gas and oil producer with all of its production in the US onshore. The company possesses long-life, low operational cost, mature producing assets with slow decline profiles in the Appalachian region. DGO has grown materially since listing on AIM in February 2017. DGO’s acquisition-led strategy has enabled it to amass a net acreage over 7.8m acres and a 1P PDP 493mmboe net reserve base. Our base case valuation currently stands at 163.6p/share. DGO recently announced reaching agreement with the state of Kentucky for its abandonment obligations following agreements reached with the states of Ohio and West Virginia.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2016A 17.1 26.5 32.5 44.2 3.5 12.7
2017A 41.8 23.2 4.7 7.7 20.1 26.9
2018E 277.7 145.3 70.7 11.7 13.2 6.1
2019E 451.0 242.4 126.6 17.1 9.1 4.0
Last updated on 22/03/2019
Industry outlook

DGO’s ability to maximise shareholder returns will be driven by its proficiency in managing lease operating expense and the deferment of abandonment costs through extended well life as production declines. Regional gas pricing has seen support from additions to Appalachian pipeline capacity, LNG demand and gas exports to Mexico.

Last updated on 22/03/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (US$m) 481.8
Forecast gearing ratio (%) 92
Price performance
%
1m
3m
12m
Actual 0.4 3.5 44.1
Relative* 0.3 (3.7) 40.6
52-week high/low 128.5p/80.8p
*% relative to local index
Key management
Rusty Hutson CEO
Eric Williams CFO
Bradley Gray Finance Director & US COO
Robert Post Non-Executive Chairman