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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.£580.3m
Last close114.50p
High / Low (52 weeks)128.5p / 80.8p
Stock market listingLN
Forecast net debt (US$m)481.8
Forecast gearing ratio (%)92
TeamResources - Oil & Gas
SectorOil & gas

Price performance

Relative *(6)(1.8)27.5

* % 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 44.2 3.3 12.2
2017A 41.8 23.2 4.7 7.7 19.2 25.7
2018E 277.7 145.3 70.7 11.7 12.6 5.8
2019E 451.0 242.4 126.6 17.1 8.6 3.8

Last updated on 29/01/2019

Investment summary

Diversified Gas & Oil (DGO) is a natural gas and oil producer with all of its production in the US onshore. The company possesses long-life, low operational cost, mature producing assets with slow decline profiles in the Appalachian region. DGO has grown exponentially since listing on AIM in February 2017. The company’s acquisition-led strategy has enabled it to amass over 7.8m net acres in the US Appalachian Basin, and a 1P PDP 493mmboe net reserve base. Our base case valuation for DGO rises from 145.9p/share to 163.6p/share (+12%) following our latest short-term forecast update.

Last updated on 01/02/2019

Industry outlook

DGO’s ability to maximise shareholder returns will be driven by its proficiency in managing lease operating expense (LOE) and the deferment of abandonment costs through extended well life as production declines. Regional gas pricing has seen support from additions to Appalachian pipeline capacity, LNG demand and gas exports to Mexico.

Last updated on 01/02/2019

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
United States
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