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Diversified Gas & Oil clinches 'stalking horse' deal to buy assets from EdgeMarc Energy

“While the company believes that EdgeMarc will be an attractive acquisition, given the court process there can be no certainty at this point that that the transaction will be completed,” the Diversified Gas & Oil said.

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The company expects to make a further announcement by August 29

Diversified Gas & Oil PLC (LON:DGOC) has clinched a “stalking horse” agreement to buy the Ohio assets of bankrupt firm EdgeMarc Energy Holdings for US$50mln.  

EdgeMarc filed for bankruptcy in May after a pipeline explosion last year disrupted production and made it unable to meet its obligations.

READ: Diversified Gas & Oil boasts strong production growth in first half

Diversified Gas & Oil said the proposed acquisition of oil and natural gas development, production and exploration assets in Ohio from EdgeMarc Energy will be conducted through a bankruptcy court-supervised process.

A stalking horse agreement is an initial offer on the assets of a bankrupt company that sets the bar for other interested parties so they can’t underbid the purchase price.  

A final deal depends on bankruptcy court approval and whether EdgeMarc receives higher offers from competing bidders at a potential auction.

If the stalking horse agreement results in a deal, Diversified Gas & Oil will fund the purchase of the assets using existing liquidity, subject to certain adjustments, free of all debt.

“While the company believes that EdgeMarc will be an attractive acquisition, given the court process there can be no certainty at this point that that the transaction will be completed,” the firm said.

“The company expects to make a further announcement on or before 29 August 2019.”

Quick facts: Diversified Gas & Oil PLC

Price: 92.8 GBX

AIM:DGOC
Market: AIM
Market Cap: £605.08 m
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