DGO acquires gas and oil wells in US

Diversified Gas & Oil has reached a definitive agreement to acquire a package of producing gas and oil wells in the states of Ohio and Pennsylvania.

DGO is acquiring the wells from a large US based oil and gas production company for a total cash consideration of $1.75m, funded from the company’s existing cash resources.

The purchase price represents less than a 2 times multiple of forward operating cash flows and is consistent with the company’s acquisition criteria for acquiring mature assets.

The wells are located in DGO’s existing areas of operations and currently produce gross gas production of 3,800 Mcfd and gross oil production of 110 bopd.

The acquired assets will be operated on a similar basis to the company’s existing wells in that region.

The wells generated net revenues of approximately $3.0 million in the year to 31 December 2016 and are expected to contribute operating cash flow for the company of approximately $1.0 million per annum.

At 9:02am: (LON:DGOC) Diversified Gas Oil Plc Ord 1p share price was +1.25p at 63.25p

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