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Diversified Gas & Oil interims results highlight success of acquisitive growth strategy in Appalacia

“The acquisition of the HG Energy assets in April delivered another step-change in production volumes and cash flow generation, which took us into the top tier of London quoted independent producers.”

Diversified Gas & Oil PLC - Diversified Gas & Oil interims results highlight success of acquisitive growth strategy in Appalacia
June's exit rate measured 90,200 boepd of production

Diversified Gas & Oil PLC (LON:DGOC) chief executive has told investors that the strategy to build scale within Appalachia continues to prove successful.

The acquisitive US-based gas and oil firm, in its interim results statement, out today, revealed that net production rose to 76,000 barrels oil equivalent per day – up 292% on last year’s half yearly figure and up 22% on the preceding six months.

June’s exit rate measured 90,200 boepd, including 69,700 boepd from the previously acquired HG Energy II Appalachia assets.

READ: Diversified Gas & Oil clinches 'stalking horse' deal

DGOC highlighted continuing success with its ‘smarter well management’ strategy which offset natural production declines. Some 430 previously non-producing wells were brought back online during the six month period.

In terms of financial results, the company highlighted first half earnings of US$131mln.

The company reported US$237.4mln of revenue for the six months, with gross profit stated at US$96.9mln while a US$32mln gain on derivative financial instruments gave help it to an operating profit of US$107.7mln.

After financing costs of US$17.6mln and a US$6.1mln impact related to asset retirement obligations, the company reported US$84.04mln of income before tax.

Income after tax and available to shareholders came in at US$62mln.

DGOC highlighted that its cash margins remained consistent to the 54% reported in the first quarter despite a period of lower natural gas and natural gas liquids prices.

It announced a 3.5 cents per share second quarter dividend – to be paid in December - adding to the 3.42 cents paid for the first quarter, which together equate to almost double all of last year’s pay-outs, with DGOC highlighting its “step change in free cash flow”.

"This was yet another highly active period for Diversified in which we delivered on a number of key corporate and operational milestones that progressed our long-term growth objectives,” said Rusty Hutson, DGOC chief executive.

“The acquisition of the HG Energy assets in April delivered another step-change in production volumes and cash flow generation, which took us into the top tier of London quoted independent producers.”

Hutson added: “In summary, our first half 2019 results reflect another period of strategic progress as the company remains exceptionally well positioned to generate consistent and sustainable value for our shareholders."

Quick facts: Diversified Gas & Oil PLC

Price: 105 GBX

LSE:DGOC
Market: LSE
Market Cap: £742.64 m
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