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Diversified Gas & Oil enters into new $500m credit facility
Independent US based gas and oil producer Diversified Gas & Oil announced on Thursday that it has entered into a $500m, five-year senior secured revolving credit facility with a syndicate of seven US banks, led by KeyBank National Association.
The AIM-traded firm said KeyBanc Capital Markets served as the sole lead arranger and sole bookrunner.
Huntington Bank, Citizens Bank, BB&T, IBERIABANK, CIT Bank and First Tennessee Bank committed to the facility as well, which the board said would provide more liquidity and lower cost debt, with a new syndicate of relationship banks.
As it had previously announced on 20 February, the facility would provide an initial borrowing limit of $140m, which would increase to $200m following anticipated closing later this month of the acquisition of certain oil and gas leaseholds, wells, working interests, licenses, related equipment and other assets of CNX Gas Company.
The board said that importantly, the facility significantly reduced its interest rate from approximately 9.9% on amounts outstanding under the company's previous facility agreement to approximately 4.5% on those amounts under the new facility.
Diversified said the signing of the new facility from KeyBank followed its 20 February $189m placing, and represented another step in its growth into a significant consolidator of mature, conventional assets in the Appalachian Basin.
"As we continue to identify complementary opportunities to grow our portfolio of high quality assets, we've stated that reducing our borrowing costs has been a strategic objective, and today's closing marks another instance of our delivering results for the benefit of our shareholders," said CEO Rusty Hutson.
"The completion of the new credit facility is an important milestone for DGO, and we are grateful for KeyBank's leadership and the support of an exceptional syndicate group participating in the Facility.
"While firmly committed to maintaining a strong balance sheet with low leverage, we are excited to have this additional capital engine to fund our growth through the responsible use of debt capital, which will reduce our cash interest costs and favourably impact our stated dividend policy and per share returns to our shareholders."