US natural gas producer Diversified Gas & Oil (DGOC) has acquired ‘Cotton Valley upstream assets and related facilities’ in the state of Louisiana for $135 million.
The deal, which represents a step out from its traditional focus on the Appalachian basin, was warmly received by the market as the shares advanced 3.7% to 122.8p.
The purchase and sale agreement with Indigo was for 780 net operated wells producing about 16,000 barrels of oil equivalent per day (boepd).
The acquisition provided 'strategic entry into prolific, gas-producing Cotton Valley/Haynesville area,' the company said.
BOOST TO RESERVES
'The acquisition will add about 50 million barrels of oil equivalent in reserves,[and] DGO expects to close the transaction in the latter half of May 2021 following its customary diligence, reviews and approvals,' it added.
The company also provided a first-quarter trading update, with adjusted average net daily production at 105,000 boepd. The company declared a first quarter dividend of 4c per share - up 14% on the level for the same period a year ago.
Commodities-focused investment bank SP Angel commented: ‘With a strong balance sheet, efficient cost structure, improved commodity price outlook, strong hedge protection and a robust outlook of potential accretive growth, investors can look forward to a stable dividend policy.
‘Indeed, two consecutive dividend increases representing more than a 14% per share increase since the global pandemic began, underlines the company’s highly resilient strategy in the current commodity price.’
