Diversified Gas & Oil Share Discussion Threads

[pro_s2009] 22/5/2020 12:10

DGOC and PRD of interest to me on that list.

[burtond1] 22/5/2020 11:57

Here, @DDS_DocHoliday caught up with independent oil analyst @mgrahamwood to discuss the latest developments in the oil environment and look through opportunities that may exist in the market..#SAVE #PPC #PHAR #CORO #PRD #DGOC #WEN #AEX #LBE #SQZ #RREhttps://twitter.com/tmsreach/status/1263784541191237632?s=21

[davydoo] 20/5/2020 15:25

This should be going straight into the FTSE250 at the next reshuffle

[fardels bear] 18/5/2020 21:13

Heck, I'm not that old!I was waiting for a pullback, got one and now I'm waiting for another. Will I ever learn?

[spangle93] 18/5/2020 21:01

As an old git, I guess the major risk is having to last long enough from when they declare it to when you receive it, FB. ;-)

I think if they can produce with opex costs half the $/mcf than their hedged received price, that's a pretty good baseline.

[fardels bear] 18/5/2020 19:54

Yes, echo both of those but sold them all in March. Good decision far as PTAL (and RRE) went. Not so good selling JSE but you win some and lose them. I'm looking at this to replace RRE. Despite its Appalachian base it feels to have a lower cowboy factor, though I may be making Andy wear my cowboy hat undeservedly. I like the hedge, the buying of existing distressed assets cheap and the possible future upside for gas producers postulated by those who claim to be in the know. I'm an old git, so I like the sustainable div most of all.

[dunderheed] 18/5/2020 19:08

Not at all geyser.
I like JSE - used to like PTAL - DGOC seems to be the share that just keeps on giving - just hope it's not another PTAL - which still can come good mind - just not a lot of trust in mgt etc. now!
Begrudgingly IOG as well lol!
Absolutely no investment advice intended.

[fardels bear] 18/5/2020 18:55

Anything else you think I might have missed, Dh?

[fardels bear] 18/5/2020 18:17

Neither, I found it on my own rather too late. I don't like the WHT so it'll have to go in the SIPP.

[dunderheed] 18/5/2020 18:08

He he lol FB - did I mention this one to you or you to me?
Snidycal - member since 18.05.2020 number of posts 1.

[fardels bear] 18/5/2020 18:07

I don't think you've done a whole lot of research on this, pal. I've done a bit and even I've worked out that this company's production is over 90% gas.

[sinnycal] 18/5/2020 17:21

Generally, it's a good business model. Conventional oil companies who do both exploration and production are able to manage steady profits and returns to shareholders by producing from wells where extraction is cheap when oil prices are low and spending on exploration when oil prices are high.

DGOC relies on a low overhead structure to keep old wells active whilst using derivatives (selling forward) to hedge the fluctating prices. Note that there was a huge increase in sales last year, yet profits halved, in spite of a big swing from negative to positive impact of hedging.

What happens when the low price of oil is sustained? At one point the futures price actually went negative. DGOC already runs lean, but with $600 million in debt, if they can't reduce their costs and they can't get increasing future prices, they will be, with apologies to Nicholas Cage and Angelina Jolie "Gone in 60 days"

Maybe they will be able to raise more money, but I fail to see how their model will work in the longer term. We are seeing already a long term downward trend in oil prices, accelerated by Covid, but there to stay.

The BBC story may give them a bit of a share price lift, but if you look to the BBC for investment advice you might want to look elsewhere...

[shanklin] 18/5/2020 08:49

Funds had plenty of opportunity to buy at £1.08 only a week or so ago. No doubt DGOC will do more placings as and when funds are needed for acquisitions beyond the two covered by recent RNS's.

[spangle93] 18/5/2020 08:41

If this move to the main market opens the field of investment in DGOC to more institutions, particularly income funds whose returns have been weakened in the last 2 months, does anyone think that there will be pressure to offer equity blocks to funds.... for example to allow purchase of additional assets?

[lab305] 18/5/2020 08:22

From the FT today.
Diversified Gas & Oil seeks deals ahead of FTSE 250 move
Co-founder Rusty Hutson says sector’s sharp downturn has ‘created a major opportunity’

The head of Diversified Gas & Oil, one of the fastest-growing UK-listed energy companies, has said the company is looking for further acquisitions as it prepares to step up to the main London market.

Rusty Hutson, who co-founded the US-based gas producer that listed in London in 2017, said the sharp downturn in the sector played directly to the company’s expansion strategy, which will lead to it becoming the largest independent producer by volume when it is expected to join the FTSE 250 this year.

“All of this mess in the market has created a major opportunity for us, as people are having to sell assets they may not normally want to,” Mr Hutson told the Financial Times.


“We’ve seen some bankruptcies and we’re going to see a lot more. Buying assets has always been a better deal for us.”

The company has grown rapidly since listing on the Alternative Investment Market (Aim) almost three years ago, with production growing from about 4,000 barrels of oil equivalent a day to nearly 112,000 boepd, primarily through acquisitions. It will begin trading on the premium segment of the main market on Monday.

DGO’s strategy is to buy up small existing gas wells, primarily in the Appalachian area of the mid-Atlantic seaboard, then attempt to drive cost savings and economies of scale rather than doing its own exploration and production.

Mr Hutson, a former banker from a family of oil producers, said this allowed the company to focus on steady cash flows and dividends rather than chasing their own production growth.

He has sought to position DGO as an alternative to companies in the US shale sector, which have often been accused of prioritising production growth over shareholder returns.

“We’ve never been a drill bit company,” Mr Hutson said. “So many E&P companies had forgotten that if you take someone’s money you better give them something for it.”

DGO’s market capitalisation has increased since 2017 to about £650m. Last week it signed two new deals, to be financed by an equity raise and debt. Its dividend yield is close to 12 per cent.

“Its dividend is reliable,” said Gervais Williams of Premier Miton Investors, which holds a stake in the company.

“It’s proven even more reliable than Royal Dutch Shell,” he said, referring to the European energy major that recently cut its dividend for the first time since the second world war, after oil prices more than halved between January and April.

DGO is expected to be admitted to the FTSE 250 in September. Its market capitalisation has grown above other UK-listed independents such as Tullow Oil and Premier Oil, which have been hard hit by the crash in oil prices caused by coronavirus.

Mr Hutson said he was confident that focusing on gas over oil would pay off because of its lower carbon footprint at a time when environmental, social and governance (ESG) investing is on the rise, and as a contraction in US oil production leads to lower associated gas output.

“Shale companies have been outspending their cash flow and they’d created a major oversupply position, even before the coronavirus pandemic,” said Mr Hutson. “In many ways they’ve been their own worst enemy for a while.”

“If we’re going to go out and raise cash from investors then the one thing we’re going to make sure we do is get them a return .

[billy ray] 18/5/2020 07:39

Rusty article on the BBC website:

[rolo7] 18/5/2020 07:36

At current market cap levels these will go into fste250 in September depending on liquidity? To early for June move?

[rik shaw] 18/5/2020 07:14

We've moved.
'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, is pleased to announce that Company's ordinary shares will be admitted to the Premium Segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's Main Market ("Admission") at 8.00am (BST) today under the ticker "DGOC'

[grum9] 15/5/2020 13:03

At 1300hrs BUYS 1,386,976 SELLS 193,951 so price drops +3%?????

[grum9] 15/5/2020 13:02

At 1300hrs BUYS 1,386,976 SELLS 193,951 so price drops +3%?????

[lab305] 15/5/2020 12:17

From today's IC. Much good it's done us !


Diversified Gas & Oil (DGOC) is an onshore US oil and gas company with a high level of debt. At first glance, this combination might have you asking when the bankruptcy proceedings will begin. Billions of dollars have been wiped off US oil and gas company valuations since early March, while BW Research estimates 50,000 field workers lost their jobs during the month.

But DGO is primarily a gas producer, a more resilient source of energy under the lockdown. And it has come out as one of the top-performing US onshore companies by buying up smaller producers and achieving genuine economies of scale. Covid-19 has not slowed this business model – chief executive Rusty Hutson told the IC that he saw the collapsing oil price as a buying opportunity: “This is a generational opportunity. In the 19 years I’ve been in the business, I have not seen [this] level of distress.”

He wasn’t exaggerating, with the company announcing on 8 April that it was in the early stages of a $110m (£89m) deal to buy assets producing 9,900 barrels of oil equivalent per day (boepd). This deal, with Carbon Energy (US:CRBO), would be funded with existing or new loans. As of 31 December, DGO’s net debt stood at $637m, representing 68 per cent of net assets. From this base it is paying a 3.5¢-a-share quarterly dividend for the March quarter.

Looking at similarly-sized oil companies Tullow Oil (TLW) and Kosmos Energy (KOS), their net debt-to-cash-profit ratios were 3 times, and almost 4 times, respectively. DGO’s net debt-to-cash-profit ratio was 2.3 times as of 31 March. Additionally, little of the company’s borrowings are due this year (just 4 per cent), and its earnings are protected through hedging. Around 90 per cent of 2020 production is hedged at a floor price of $2.70 per million British thermal units (btu), compared with the average March Henry Hub price – per NYMEX – of $1.79/mbtu. The gas fall of around 10 per cent is far less dramatic than oil, which went into negative pricing in the US for the May WTI crude contract because of the drop in demand and shortage of storage. DGO’s adjusted cash profit from the March quarter was level with the last three months of 2019, at $78m. This week will be one of DGO’s last on Aim – it is moving to the main board on 18 May. Buy.

[fardels bear] 14/5/2020 17:54

And all the other countries? Economies somehow magically unharmed?

[lab305] 14/5/2020 10:19

The one consolation in this Draconian lockdown is that the destruction of the economy will inevitably cause the pound to continue to fall . I have enjoyed an at least 10% increase in dividend since the start of DGOC from currency movement alone. I see no reason why this fall will not continue or even accelerate . The repercussions and damage being caused to the UK at present are unquantifiable.

[rik shaw] 13/5/2020 17:42

Getting close to being on the Main Market: