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Diversified Gas & Oil extends Ohio well retirement agreement

The agreement with the Ohio Department of Natural Resources now runs until December 2029

Diversified Gas & Oil PLC - Diversified Gas & Oil extends Ohio well retirement agreement

Diversified Gas & Oil PLC (LON:DGOC) told investors that it has extended its asset retirement agreement with the state of Ohio.

The original arrangement had a five-year term and it has extended the deal for another five years, setting a new expiry date of 31 December 2029.

In a statement, the company noted that the terms remain substantially unchanged though commitments increase so that the company is now required to plug 20 wells per year - up from 18 wells per year - over the full duration of the agreement.

READ: DGOC says 2020 revenues are protected by hedging

It will also post a surety bond of US$0.65mln for the life of the agreement where the company owns around 7,100 wells.

The company noted that in 2019 it was in full compliance with the original terms before the new arrangement was agreed.

"I would like to thank the Ohio Department of Natural Resources and the Division of Oil and Gas Resources for their partnership in this extension as we seek to serve the local communities in which we operate by providing stewardship of our resources and assets to safely retire wells that have reached the end of their productive lives,” said Rusty Hutson, DGOC chief executive.

“This agreement, particularly in tandem with our existing agreements with the other states in which we operate, further strengthens our asset retirement programme, and provides clear visibility into the cash flows and operational responsibility required to deliver on our commitment to retire wells."

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Price: 93.8 GBX

LSE:DGOC
Market: LSE
Market Cap: £663.37 m
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