Diversified Gas & Oil plc’s (LON:DGOC) daily gas production has doubled following the acquisition of Appalachian Basin gas producer Alliance Petroleum.
The deal has now completed for a total consideration of US$95mln (£66.9mln) comprising the purchase price of US$70mln plus US$25mln of debts.
Alliance’s gas wells are close to the DGOC’s existing operations in the Appalachian Basin principally in Pennsylvania and West Virginia, with some wells in Ohio.
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Current net daily production from these wells is approximately 53 Mcfed (8,800 barrels equivalent), while Alliance has 49.3 MMboe (million barrels) of proven reserves with an estimated cash flow value (NPV) of US$168 mln.
In the 11 months to 30 November, Alliance generated unaudited annualised pre-tax profits of US$13.5mln (£9.5mln).
Following completion of the acquisition, the DGOC estimates that group net daily production will increase from approximately 62 Mcfed to 115 Mcfed (or 19,100 barrels per day equivalent)
Rusty Hutson, chief executive, said: “Alliance Petroleum adds high-quality assets that complement our existing portfolio, as well as an experienced operating team.
“Collectively, we now turn our attention to the integration and optimisation of these assets, leveraging our expanded footprint to drive operational efficiencies and lower operating costs.
“We also remain on track with regards to our other transformative acquisition of assets from CNX Gas Company LLC, which will further cement our position as the largest producer on AIM when that transaction completes in the next few weeks."