27th Aug 2019 10:04
(Alliance News) - Diversified Gas & Oil PLC on Tuesday announced the acquisition for USD7.5 million of some natural gas gathering systems that it currently supplies in the US.
The assets, which have been bought from Dominion Gathering & Processing Inc and Equitrans LP, comprise 1,700 miles of gas-gathering pipelines alongside compressors, measuring stations, and related facilities and equipment.
DGO said the systems, in Pennsylvania and West Virginia, currently move around 109 billion British thermal units of natural gas per day, of which DGO produces around 60%.
The tariffs charged on third-party volumes will increase DGO's third-party revenue by around USD3 million a year, partially offsetting the costs of running the systems. Owning the systems also will allow DGO to redirect volumes to sales points with higher prices.
DGO now owns around 12,000 miles of pipelines across the Appalachian Basin.
Chief Executive Rusty Hutson said: "In keeping with DGO's growth strategy, we have capitalised on the opportunity to acquire what has become non-core assets for these sellers. These small, yet strategically complementary bolt-on acquisitions will add scale to our midstream capabilities and provide a high level of optionality with regards to both routes to market and improved pricing.
"These acquisitions further diversify our operations and revenue streams and strengthen our long-term ability to control costs and protect margins."
DGO shares were up 0.3% in London on Tuesday at 101.83 pence.
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