9th Mar 2020 11:48
(Alliance News) - Diversified Gas & Oil PLC on Monday bumped its dividend up over 20% in a year it achieved record net production.
DGO, which has producing assets across the Appalachian basin in the US, is paying a final dividend of 3.50 US cents per share. This takes the year's total to 13.92 cents, 24% higher than the 11.225 cents paid in 2018.
The company exited 2019 with production of 94,800 barrels of oil equivalent per day, as reported at the end of January. The average over 2019 was 84,778 barrels per day, more than double the year before.
The vast majority of DGO's production comes from natural gas. DGO's average realised sales price including the impact of cash-settled derivatives was 11% lower than the year before, at USD15.76 per barrel.
Production was boosted by a number of acquisitions. This included oil and gas sites in Ohio, which were bought in July 2019 for USD50 million. It also purchased assets in Pennsylvania and West Virginia earlier in the year for USD400 million.
DGO, which is based in Alabama, booked revenue of USD462.3 million, 60% higher than the year before due to the higher production. Pretax profit fell 50% to USD131.5 million, however, due to higher depreciation and depletion, as well as a doubling in finance costs.
"The past year has been one of significance for the company and has seen us achieve a number of key milestones as we build upon the strong growth platform that we have created. This year we achieved peak production of over 96,000 barrels of oil equivalent per day, cementing ourselves as one of the largest independent producers on the London Stock Exchange," commented Chief Executive Rusty Hutson.
"This level of production and our focus on operational efficiencies have allowed us to generate strong levels of free cash flow ensuring that, when combined with our strong hedge book and innovative financing instruments, we create significant shareholder value whilst continuing to maintain a healthy balance sheet."
"Our strategy remains focused on generating growth through acquisition, integration and efficient operations, whilst continuing to strengthen our foundations of business systems and corporate governance," Hutson added.
Looking ahead, DGO said the US gas market continues to be "challenging" due to very low prices and "abundant" supply.
Shares were 9.1% lower on Monday morning in London at a price of 66.00 pence each.
By George Collard; [email protected]
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