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Diversified Gas & Oil to buy assets in Appalachian Basin for $575m
AIM-listed Diversified Gas & Oil has signed a non-binding letter of intent to buy a network of gas and oil producing assets in the Appalachian Basin in western Pennsylvania and eastern Ohio, for $575m in cash.
The assets comprise around 11,350 wells with current net total gas production of 32.1 million barrels of oil equivalent per day, which will represent an increase in the net daily output of around 114% over the company's daily production levels at the end of March.
The consideration for the acquisition, which is expected to be immediately accretive to earnings, will be funded from a new $1bn debt facility with an initial borrowing base of $600m, and a placing to raise up to $225m.
If it proceeds, the deal will constitute a reverse takeover and will be subject to shareholder approval. As a result, the company's ordinary shares have been suspended from trading on AIM with immediate effect and will remain suspended until an AIM admission document has been published or until the company confirms that the transaction is not going through.
At 1430 BST, the shares were up 1.5% to 95.63p.