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Diversified Gas & Oil (DGOC)

Business description

Diversified Gas & Oil is a conventional natural gas and oil producer with a main focus in the US onshore. The company possesses long-life, low operational cost, mature producing assets with slow decline profiles in the Appalachian region, in the states of Pennsylvania, West Virginia and Ohio.

Stock data

Market cap.£577.8m
Last close114.00p
High / Low (52 weeks)128.5p / 75.9p
Stock market listingLN
Forecast net debt (US$m)353.4
Forecast gearing ratio (%)65
TeamResources - Oil & Gas
SectorOil & Gas

Price performance

%1m3m12m
Actual(8.1)(3.4)50.5
Relative *(3.9)5.661.2

* % Relative to local index

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Y/E Dec Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (fd) (c) P/E (x) P/CF (x)
2016A 17.1 26.5 32.5 34.3 4.3 12.2
2017A 41.8 23.2 4.7 5.6 26.5 25.9
2018E 215.2 113.8 70.5 12.3 12.1 6.3
2019E 370.8 212.7 150.8 21.6 6.9 4.0

Last updated on 01/10/2018

Latest research

Investment summary

Diversified Gas & Oil (DGO) has grown exponentially since listing on AIM in February 2017. The company’s acquisition-led strategy has enabled it to amass over 6.5m net acres in the US Appalachian Basin, taking net production to 32.5kboed in FY18, underpinned by a 1P PDP 393mmboe net reserve base. We see potential for further inorganic growth, diligent management of existing well stock and infill drilling in the event of a gas price recovery to provide a platform for further growth. DGO trades below our base case valuation of 138.1p per share, which excludes asset consolidation and the infill drilling option value. A 2019 6.7% dividend yield supports the current share price and investment risk/reward is skewed to the upside given the potential for further value accretive M&A. Key sensitivities include gas price realisations and cash operating costs.

Last updated on 01/10/2018

Key management

Rusty Hutson , CEO
Eric Williams, CFO
Robert Post, Non-Executive Chairman
Bradley Gray , Finance Director & US COO

Company address

1100 Corporate Drive
Birmingham, Alabama
35242
United States
205-408-0909
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