DIVERSIFIED GAS AND OIL AIM: DGOC Overview Founded 2001 with IPO in February 2017 A top Appalachian gas producer; largest on AIM Mature, PDP w/ low declines of 5% per year Focused on safety and environmental stewardship Adj.…
1H19 AND RECENT HIGHLIGHTS CONTINUED OPERATIONAL EXCELLENCE THROUGH COMMODITY VOLATILITY OPERATING HIGHLIGHTS FINANCIAL HIGHLIGHTS 1H19 net production averaged 76 Mboepd(a), up 295% compared 1H19 adjusted EBITDA of 131 million(a)(b)…
COMPANY OVERVIEW
BECOMING THE LARGEST PRODUCER ON AIM NEARLY 20 YEARS IN THE MAKING 90,000Boe/d Net 70,000 Boe/d Net 19 18 Raised net equity proceeds Net Raised net equity of 180 MM to fully fund 10,400 Boe/d Alliance & CNX acquisitions…
BUSINESS MODEL ACQUIRE, PRODUCE & PLUG, DRILL Acquire and manage producing natural gas and oil properties to generate cash flows, providing stability and growth for our stakeholders Initiate Ongoing Potential Result Maximise…
THE DIVERSIFIED DIFFERENCE DGO STANDS OUT AMONGST ITS PEERS IN THE INDUSTRY US Unconventional Key Attributes DGO E&P Corporate decline rates Low High Character Asset Large inventory of undeveloped resources Yes Yes Capital…
OLDER WELLS EXHIBIT LOWER DECLINES DGO ACQUIRES WHEN AVERAGE WELL AGE IS PAST STEEPEST PORTION OF DECLINE CURVE COMMENTARY ILLUSTRATIVE HORIZONTAL WELL TYPE CURVE The illustrated type curve presented on the right is Seller…
THE DGO DIFFERENCE DGOS BASE DECLINE IS MATERIALLY LOWER THAN TARGETS ANNOUNCED BY APPALACHIAN PEERS ILLUSTRATIVE NORMALISED PRODUCTION % of Base Year Production Remaining 5% 100% after 3 Years 6% 5% DGO Difference 85% 75%…
CONTINUED COMMITMENT TO OUR STRATEGY A DISCIPLINED APPROACH TO CREATING LONG-TERM VALUE Pay Dividends at 40% of Free Acquire Grow the Cash Flow Complementary Organic Upstream and Opportunity Set Midstream Assets Relentlessly…
ENHANCING THE FOUNDATION; EXPANDING TARGETS Basin Agnostic External Initiatives Replicate DGO model across scalable, under appreciated assets marked by underinvestment Consistent Complementary Asset Profile Midstream…
OUTLOOK: 2019 & BEYOND OUR DIFFERENTIATED BUSINESS MODEL DRIVES CASH FLOW GENERATION AND SHAREHOLDER RETURNS A Vast Opportunity set coupled with is driving our Capital Allocation framework Organic Cash Acquisitions in 1 Flow…
THE DGO DIFFERENCE Some companies are built to drill and some to operate. Diversified is built to operate very efficiently. - DGO Investor
OUR PEOPLE DRIVE RESULTS UNMATCHED EXPERIENCE IN THE APPALACHIAN BASIN ADDITIONS OF EXPERIENCED TEAMS SOUTHERN DIVISION LEADERSHIP TEAM IN THE LAST 18 MONTHS: 120 Employees DGO LEGACY +335 Employees NORTHERN OPERATIONS +495…
OUR APPROACH TO WELL OPERATIONS VALUE CAPTURED: ACQUISITION & OPTIMISATION TO ASSET RETIREMENT OPTIMISING WELL LIFE Operating Initiatives Increase production, extend well-life & reactivate inactive wells Leverage expansive…
SMARTER WELL MANAGEMENT PROGRAMME IMPROVING PRODUCTION TO GENERATE INCREMENTAL CASH FLOW Simple Objectives Improve Return inactive production on wells to active wells production 6 1 Pumpjack Installation 4 Plunger Lift Setup…
CREDIT FACILITY HIGHLIGHTS GENERATING SIGNIFICANT LIQUIDITY Facility 500MM 1.0B 1.5B Size(a) Committed to maintaining low leverage 1,000 950 950 Target 2x or less Net Debt / Adj. EBITDA 5x Increase Provides cost effective means…
VALUE-FOCUSED MANAGEMENT OF FREE CASH FLOW SINCE IPO LOW CAPEX INTENSITY OF DGOS LONG-LIFE, LOW-DECLINE ASSETS GENERATES SIGNIFICANT FREE CASH FLOW 40% Target of FCF Dividends 96 Paid and Declared(a) 59 32 Share Buyback 32 Since…
COMMITTED TO SHAREHOLDER RETURNS REGULAR AND INCREASING RETURNS TO SHAREHOLDERS 140 Dividend Paid 0.16 Dividend Declared 0.14 0.14 128 0.13 13 0.14 120 Share Buybacks 0.11 32 19 0.12 Dividends per Share 100 23 23 0.10 80…
TOTAL SHAREHOLDER RETURN SINCE IPO(a) SHARE PRICE PERFORMANCE REACTS TO THE DIVERSIFIED DIFFERENCE 300 250 Share Price Growth 73% Dividend Return 30% 200 Total Shareholder Return 103% 203.32 167.75 International Producers…
ILLUSTRATIVE RUN-OFF MODEL OF DGOS EXISTING ASSETS DGOS ASSET PORTFOLIO SUPPORTS 3.5B OF CASH DISTRIBUTIONS OVER 75 YEARS Undiscounted 6.2B of net Field CF Years 1-38 Years 39-75 Major Assumptions: Full cash run-off, no further…
APPENDIX
TRANSFORMATIVE ACQUISITIONS SINCE IPO 6.8 MBoepd 8.8 MBoepd Current DGO Production(a) 90 MBoepd 35 MMboe 49 MMboe PDP Reserves PDP Reserves 0.5 Million Acres 1.5 Million Acres TITAN 84 MM APC 95 MM 9.0 MBoepd 32.0…
SHARE BUYBACK PROGRAMME THE BUYBACK PROGRAMME COMPLEMENTS DGOS STATED DIVIDEND POLICY AS A MEANS TO RETURN VALUE TO SHAREHOLDERS, AND IS UTILISED WHEN PURCHASES ARE ACCRETIVE ACROSS KEY VALUE METRICS, INCLUDING FREE CASH FLOW AND NET…
APPENDIX: HEDGING
HEDGE PORTFOLIO SUMMARY UPDATED AS OF 19 JULY 2019 Gas Oil NGL Volumes Hedge Type 2Q 3Q 4Q FY FY 1Q 2Q 3Q 4Q FY FY 1Q 2Q 3Q 4Q FY FY 1Q Period 19 19 19 20 21 22 19 19 19 20 21 22 19 19 19 20 21 22 Swaps 2.81 2.80 2.79 2.80…
HEDGE DETAIL: NATURAL GAS UPDATED AS OF 19 JULY 2019 FINANCIAL HEDGES Natural Gas (MMBtu, /MMBtu) 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 NYMEX NG Swaps 15,179,600 17,639,049 16,146,581 15,559,644 8,982,891 6,086,872…
PLANNING SAFE & EFFICIENT OPERATIONS PROACTIVELY MANAGING WELLS AND PLANNING OUT ASSET RETIREMENT DGO ASSET RETIREMENT DECISION TREE Does it present any Is the well threat to the NO economic or STEP environment STEP not 1 2 YES…
DGOS SAFE & SYSTEMATIC ASSET RETIREMENT OUR PROACTIVE INITIATIVE FOR LONG-TERM ENVIRONMENTAL AND ECONOMIC SUSTAINABILITY DGOs Safe & Systematic Asset Retirement The DGO Way The Wrong Way Programme reflects DGOs solid commitment to:…
SAFELY, SYSTEMATICALLY RETIRE WELLS OVERVIEW OF DGOS ASSET RETIREMENT OBLIGATIONS PV10 TO UNDISCOUNTED COMPARISON (MM) FORECASTING WELL RETIREMENT PROGRAMME 60 Cost: Actual experience 70,000 Net Cash Flow (Field Level)…
CALCULATING THE ASSET RETIREMENT OBLIGATION ARO Input Underlying Determinants DGO Value Well Life is a primary determinant I Timing of Cash Outlay Smarter Well Management impactful to well life Range: Wtd Avg: 1-75 years 50…
APPALACHIAN BASIN HAS DEOMNSTRATED LONG WELL LIFE WITH 160 YEARS OF PRODUCTION HISTORY I Indicative wells from the basin demonstrate productive lives ranging from 64 - 93 years with declines of 3% Exponential decline Total life 93…
APPALACHIAN BASIN WELLS HAVE DEMONSTRATED LOW DECLINES SAMPLE SIZE OF NEARLY 20,000 WELLS I The typical well has reached an exponential declination rate of < 6% per annum; Smarter Well Management programme focused on further reducing…
LONG-TERM AGREEMENTS WITH STATES PROVIDE VISIBILITY TO CASH SPEND, OUR COMMITMENT TO LOCAL COMMUNITIES, AND BUILDS TRUST WITH REGULATORS II DGO proactively engaged key states and successfully negotiated long-term agreements with…
LONG WELL LIFE UNDERPINS EXTENDED PLUGGING PROGRAMME II Model assumes 75-year plugging programme horizon though engineering data shows 7,000 wells (12%) continue to produce at that time. COMMENTARY CUMULATIVE PV10 GRAPH Agreements…
ARO COST ESTIMATES BASED ON DGOS ACTUAL EXPERIENCE AND MARKET DATA II DGO reviewed the plugging parameters relevant to each state and the nature of its wells to determine its estimated cost to plug each well; over 87% of DGOs well…
DGO DETERMINED PLUGGING COSTS AT THE WELL LEVEL II II DGOs plugging programme scale provides the opportunity to further reduce current costs, as vendors give lower pricing for blocks of work; experience over a growing body of work…
SCALING AND EFFICIENCIES DRIVE DOWN PER-WELL COSTS II II Actual Kentucky well plugging is illustrative of DGOs success in reducing plugging costs by diligent job management Ex: Actual Kentucky P&A Cost Reduction Since gaining…
INTEREST RATE INPUTS III ARO liability must be risked and discounted using a credit-adjusted risk-free rate, as per ASC 410-20 / IAS 37 Discount rate must reflect risks specific to the liability Discount Rate 8.0% Discount rate is…
ACCOUNTING FOR THE DECOMMISSIONING LIABILITY CALCULATING THE IMPACT OF THE FOUR INPUTS TO ARO Commentary Balance Sheet Entry Composition (MM) DGOs plugging programme used in the reserve report was adjusted for the balance sheet, as…
DIVERSIFIED BROKERS Corporate Mirabaud Stifel PO BOX 381087 MIRABAUD SECURITIES LIMITED STIFEL NICOLAUS EUROPE LTD BIRMINGHAM, ALABAMA 10 BRESSENDEN PLACE 1650 CHEAPSIDE 35238-1087 (USA) LONDON SW1E 5DH LONDON EC2V 6ET WWW.DGOC.COM…
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