Extended Kentucky Agreement
16 October 2019
DIVERSIFIED GAS & OIL PLC
("DGO" or the "Company")
Extended Kentucky Agreement
Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids and oil wells as well as midstream assets, is pleased to report that it has extended its five-year definitive asset retirement agreement with the Commonwealth of Kentucky ("Kentucky") announced on 19 February 2019 by an additional five years, now covering asset retirement activities through the period ending 31 December 2028 ("Agreement").
The terms of the Agreement remain substantially unchanged and include DGO's commitment to plug or return to production at least 50 gas and oil wells per annum for the duration of the Agreement, of which DGO will plug at least 20 wells each calendar year. The Company will also post an additional $1 million bond bringing its total for the benefit of Kentucky to $2.5 million. The Company currently owns approximately 7,500 operated wells in Kentucky. The extended Agreement remains aligned with the Company's ongoing Smarter Well Management programme to return previously non-productive wells to production while safely and permanently retiring those wells that have reached the end of their productive lives.
Prior to extending the original asset retirement agreement, DGO was in full compliance with its terms and successfully plugged the first year 25-well requirement. Committed to being a good steward of the environment in which it operates and further desiring to provide optimal clarity with respect to its long-term asset retirement commitment with Kentucky, DGO worked proactively with state regulators to extend the plugging consent order.
DGO has agreements of ten years or longer with Kentucky (10 years), Pennsylvania (15 years; extendable to 20 years) and West Virginia (15 years) covering more than 75% of its total gas and oil wells with total related bonding arrangements in these states approximating $12.5 million, including the $2.5 million in Kentucky. Including the Company's existing 5-year agreement with Ohio, DGO has similar agreements that cover more than 98% of its total gas and oil wells.
Commenting on the extended agreement, CEO, Rusty Huston, Jr., said:
"I would like to thank the Kentucky Energy and Environment Cabinet and members of the Department for Natural Resources and the Division of Oil and Gas for their partnership in this extension as we seek to serve the local communities in which we operate by providing reliable energy to the region while safely plugging wells. This agreement, particularly in tandem with our existing agreements with the other states in which we operate, underpins our asset retirement program and provides clear visibility into the cash flows and operational responsibility required to deliver on our commitment to safely and systematically retire wells."
Diversified Gas & Oil PLC
Rusty Hutson Jr., Chief Executive Officer
Brad Gray, Chief Operating Officer & Finance Director
Eric Williams, Chief Financial Officer
Teresa Odom, Vice President, Investor Relations
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