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Diversified Gas & Oil strikes gas gathering acquisition

“These small, yet strategically complementary bolt-on acquisitions will add scale to our midstream capabilities," said chief executive Rusty Hutson.

Diversified Gas & Oil PLC - Diversified Gas & Oil strikes gas gathering acquisition
60% of the gas in the systems is produced by DGOC

Acquisitive Diversified Gas & Oil PLC (LON:DGOC) has unveiled new deals to acquire additional assets for US$7.5mln.

It is acquiring two separate packages of natural gas gathering systems in Pennsylvania and West Virginia, which are expected to enhance margins.

The company, in a statement, highlighted that the assets currently move approximately 109,000 MMBtu of natural gas per day, of which 60% comes from DGOC production operations.

Moreover, it described the assets as being strategically important. The acquisitions allow the company to control the flow of production thus increasing ‘optionality to re-route gas to sales points with higher realised prices’.

The deal eliminates risk for future rate increases to move gas on the systems.

It expects the deal will increase third-party midstream revenues by over US$3mln per year. The company said that it also sees opportunities to deploy DGO's expertise to enhance the systems' efficiency with incremental, low-cost and short pay-back maintenance initiatives.

"In keeping with DGO's growth strategy, we have capitalized on the opportunity to acquire what has become non-core assets for these sellers,” said Rusty Hutson, DGOC chief executive.

“These small, yet strategically complementary bolt-on acquisitions will add scale to our midstream capabilities and provide a high level of optionality with regards to both routes to market and improved pricing. 

“These acquisitions further diversify our operations and revenue streams and strengthen our long-term ability to control costs and protect margins."

Quick facts: Diversified Gas & Oil PLC

Price: 107.6 GBX

LSE:DGOC
Market: LSE
Market Cap: £761.03 m
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