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Cenkos upbeat on Diversified Gas & Oil after latest value-adding acquisition

Cenkos described the US$110mln deal as “value accretive”.

Cenkos upbeat on Diversified Gas & Oil after latest value-adding acquisition

Stockbroker Cenkos repeated a ‘buy’ recommendation for Diversified Gas & Oil PLC (LON:DGOC) following this week’s US$110mln acquisition.

Analyst James Mccormack, in a note, commented: “DGO has once again proved it is the acquirer of choice within the Appalachian Basin.”

On Wednesday, the company announced the deal to buy some 9,900 barrels oil equivalent production in 6,500 “mature, low decline conventional” wells.

READ: DGOC lands US$110mln of extra production to “enhance dividend”

DGOC is acquiring some 4,700 miles of intrastate gas gathering pipelines in West Virginia, transporting the majority of the Carbon Energy production as well as third-party product. It also picks up two active gas storage fields, which generate third-party revenues and give DGOC greater control optionality.

Cenkos described the deal as “value accretive” and it will provide further scale, to reduce costs and enhance margins.

“The Carbon acquisition is consistent with DGO’s strategy of adding high-quality, long-life assets to the company’s portfolio,” Mccormack said.

“The assets are synergistically compatible with the company’s existing portfolio in terms of profile and geography.

“We view the Carbon acquisition as a natural fit for DGO, further demonstrating DGO’s ability to add value, enhancing the dividend to shareholders whilst continuing to pay down debt.”

Quick facts: Diversified Gas & Oil PLC

Price: 103.8 GBX

Market: AIM
Market Cap: £733.95 m

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