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."