Diversified Gas &Oil (DGOC.L) Raised gross proceeds of US$85.8 million

Results of Fundraising

Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids, and oil wells as well as midstream assets, announced on 11 May 2020 the details of a Proposed Fundraising and the Potential Acquisitions.

The Company is pleased to announce that it has conditionally raised gross proceeds of US$85.8 million (approximately £69.4 million) (US$81.7 million net of expenses, approximately £66.1 million net of expenses) from new and existing institutional investors (the “Fundraising”). The Fundraising comprised a placing (the “Placing”) and subscriptions from US investors (the “Subscriptions”) for an aggregate of 64,280,500 new ordinary shares (the “Fundraising Shares”) at 108 pence per share (“Fundraising Price”).

The Fundraising Shares represent 10% of the Company’s existing issued share capital, and the Fundraising Price is equal to a 1.6% discount to the closing mid-market price of the Company’s Ordinary Shares on 11 May 2020.

DGO consulted with a number of its major shareholders prior to the Placing and has respected the principles of pre-emption as far as possible through the allocation process. The Company is pleased by the strong support it has received from existing shareholders and new investors.

The net proceeds of the Fundraising are intended to be used to fund the equity portion of two Potential Acquisitions, which are expected to have an aggregate initial consideration of US$235 million in the event that both complete. The Potential Acquisitions include the purchase of certain upstream and midstream assets from Carbon Energy Corporation for an initial consideration of US$110 million, and certain upstream and midstream assets from EQT Corporation for an initial consideration of US$125 million. The assets contemplated by the Potential Acquisitions had combined 2019 adjusted net production of approximately 18 Mboepd (99% natural gas), representing approximately 20% of 2019 group net production. The Potential Acquisitions are expected to be immediately accretive to the Company’s earnings and dividends per share, based on the Company’s 2019 numbers, management’s estimates for the assets, and the Fundraising.

Should the Company not close the Potential Acquisitions, the Company will determine the most appropriate use of the net proceeds, including potentially paying down amounts drawn on its revolving credit facility and/or investing in other acquisition opportunities aligned with its stated strategy.

Settlement for the Fundraising Shares , together with the admission of the Company’s Ordinary Shares, as enlarged by the Fundraising Shares, to the Premium Listing Segment of the Official List of the Financial Conduct Authority (the “Official List”) and the London Stock Exchange’s Main Market (together, “Admission”) is anticipated to take place at 8.00 a.m. on 18 May 2020. Settlement of the Fundraising is conditional upon, amongst other things, Admission becoming effective and upon the Placing Agreement not being terminated in accordance with its terms.

The Fundraising Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects with the Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the enlarged share capital from Admission. Investors in the fundraising will also be eligible for the Q4 2019 and Q1 2020 dividends.

Stifel Nicolaus Europe Limited, Mirabaud Securities Limited and Credit Suisse Securities (Europe) Limited (together, the “Joint Global Coordinators”) are acting as joint global coordinators and joint bookrunners in connection with the Fundraising. Cenkos Securities plc is acting as Nominated Adviser to the Company.

New Ordinary Shares to be issued pursuant to the Placing (the “Placing Shares”) are 61,813,500. New Ordinary Shares to be issued pursuant to the Subscriptions (the “Subscription Shares”) are 2,467,000.

Application for Admission and Trading

Applications will be made for admission of the entire ordinary share capital of the Company, as enlarged by the Placing Shares and the Subscription Shares, to the Premium Listing Segment of the Official List of the Financial Conduct Authority and to trading on the main market of the London Stock Exchange plc.

Total Voting Rights

Following Admission, the Company’s total issued share capital will consist of 707,085,502 ordinary shares of one penny each. The Company does not hold any ordinary shares in treasury. Therefore, following Admission, the total number of voting rights in Diversified Gas & Oil Plc will be 707,085,502. This figure may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.

Capitalised terms not otherwise defined in the text of this Announcement have the meanings given in the Company’s announcement dated 11 May 2020.

Commenting on the Potential Acquisitions and Fundraising, CEO, Rusty Hutson said:

“The completion of this fundraise, against the challenging economic and industry backdrop, reflects the unique proposition of DGO and the support that we have for our continued growth and value creation ambitions. Our investment story is centered on low-risk cash flow and a commitment to shareholder returns, and our business model ensures we are able to deliver both, even in the current low commodity price environment. We thank our new and existing shareholders for their support in this fundraise and look forward to progressing our due diligence for these acquisitions with the goal of closing both of these transactions.”

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