DIVERSIFIED GAS AND OIL HIGH DIVIDEND PAYING DEFENSIVE PLAY IN A LOWER FOR LONGER COMMODITY OUTLOOK Market Summary Trading Price (31Oct2019) 1.07 / 1.38 Ticker Symbol (AIM) DGOC Shares Outstanding MM (31Oct2019) 659 Average Daily…
THE DGO DIFFERENCE ACQUIRE, PRODUCE, DRILL Acquire Produce Target lowcost, longlife, low Deploy rigorous field management decline production programmes Focus on highquality assets with Reduce unit operating costs, create…
THE DGO DIFFERENCE: DELIVERING REAL VALUE SOME COMPANIES ARE BUILT TO DRILL, AND SOME TO OPERATE. DIVERSIFIED IS BUILT TO OPERATE VERY EFFICIENTLY DGO INVESTOR PERCEPTION REALITY Cash wise Cash deficient Cash used to paydown LIBOR+…
A DIFFERENTIATED BUSINESS MODEL = DIFFERENTIATED SHAREHOLDER RETURNS TOTAL SHAREHOLDER RETURNS SINCE IPO(a) Avg. Div. Yield Since IPO: 8% Share Price Growth 90% Current Div. Yield: 10% Dividend Return 35% Total Shareholder Return…
RECENT ACQUISITIONS COMPLEMENTARY UNCONVENTIONAL AND MIDSTREAM ASSETS EdgeMarc Energy Midstream Assets Close Date: 19 September 2019 Close Date: 27 September 2019 Net Purchase Price: 38 MM(a) Net Purchase Price: 7.7 MM High…
UNDERSTANDING OUR UNCONVENTIONAL ASSETS IMPLEMENTING THE DGO STRATEGY ACROSS WELL TYPES 16,000 Developer / Seller Produces DGO Purchases + Efficiently Produces 12,000 Hyperbolic Declines Exponential / Terminal Declines =…
CORPORATE DECLINE AND OPERATING COSTS Projected STEADY, STABLE PRODUCTION DECLINE YIELDS CONSISTENT CASH FLOW Cost Increase over 3 Years Lowdecline, steady production creates stable Projected Cost Increase 54% 14.17 unit…
RETURNING UNPRODUCTIVE WELLS TO LIFE OFFSETTING NATURAL DECLINES BY BRINGING WELLS BACK ONLINE Objectives Well Activity Activity Date Capital Cost Improve production on active, producing wells Plunger Lift Optimisation 1Q 2019 250…
OUR PEOPLE DRIVE RESULTS UNMATCHED EXPERIENCE IN THE APPALACHIAN BASIN ADDITIONS OF EXPERIENCED TEAMS SOUTHERN DIVISION LEADERSHIP TEAM IN THE LAST 24 MONTHS: 120 Employees DGO LEGACY +335 Employees NORTHERN OPERATIONS +495…
SMART OPERATIONS DRIVE PROFIT OPPORTUNITIES RELENTLESS FOCUS ON EXECUTION CONTINUES TO PROVIDE EXCEPTIONAL VALUE 1 Payroll Synergies Completed Initiatives InProcess Initiatives Balance and optimise both upstream and midstream…
SAFELY, SYSTEMATICALLY RETIRE WELLS OVERVIEW OF DGOS ASSET RETIREMENT PROGRAMME AND RELATED OBLIGATIONS LONGTERM AGREEMENTS WITH STATES VALUING THE ASSET RETIREMENT OBLIGATION (MM) Pennsylvania PV Analysis Bridging to the Balance…
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…
FINANCIAL OVERVIEW
PRODUCTION AND REVENUE LONGLIFE, LOWDECLINE ASSET BASE PROVIDES STABLE PRODUCTION REDUCES CASH FLOW AND EARNINGS VOLATILITY Daily Production (MBoepd) Total Production(a) 91 Natural Gas 83 NGL 70 69 Oil 70(b) Hedging…
Realised Price Hedged HEDGED MARGIN & CASH EXPENSES Cash Margin after OpEx and G&A General & Administrative LEVERAGING SCALE TO REDUCE UNIT COSTS & ENHANCE CASH MARGINS Gathering & Compression Owned Gathering & Transportation 3rd…
DGO DELIVERING CASH FLOW TODAY AS PEERS PROMISE CASH FLOW TOMORROW 129 40% Target of FCF 68% Dividends 119 Paid and Declared(a) 82 43% 47 16% Share Buyback 47 Since Programme 25% 2019 IPO CapEx YTD (Feb 2017) Cash Interest…
HEDGED TO PROTECT CASH FLOW, DIVIDENDS & LEVERAGE OUTERMONTH TARGET LEVELS ALLOW FOR MANAGING THROUGH ILLIQUID / INEFFICIENT MARKETS Utilising a variety of hedge structures allows DGO to Portfolio Duration Preferred Structures…
DGO SECURITISATION OVERVIEW
SECURITISATION OVERVIEW Leverage Liquidity Optimised Neutral Enhancing Capital Structure ABS proceeds reduce Creates 60MM(a) of Reduces sole reliance on RBL utilisation and additional liquidity at commercial banks related…
ASSET BACKED SECURITISATION HIGHLIGHTS ABS OFFERS DISTINCT ADVANTAGES OVER HIGH YIELD FINANCINGS OR RESERVE BASED LENDING 200 million of asset backed securities (ABS) issued in DGOs inaugural securitisation transaction Privately…
ASSET BACKED SECURITISATION HIGHLIGHTS (CONTD) SECURITISATION OFFERS NUMEROUS BENEFITS - TODAY AND TOMORROW BBB- investment grade rating by Fitch and Morningstar supports long-term, low cost debt Fixed-rate ABS financing (5%)…
PROGRESSING TOWARDS OPTIMAL CAPITAL STRUCTURE TARGETING UNSECURED TERM DEBT Management believes DGOs size and financial profile justify a BB/BB- rating from the major rating agencies However, first time term bond issuers would expect…
ABS ENHANCES DGOS CAPITAL STRUCTURE ABS PROCEEDS REDUCE RBL UTILISATION Liquidity Analysis ( Millions) Upstream Work Int. Gross ABS Borrowing Amount RBL Liquidity Scenarios Slice Proceeds Base Drawn(a) Utilisation Liquidity(b)…
OPTIMISED CAPITAL STRUCTURE ORGANIC CASH GENERATION REDUCES LEVERAGE Commentary Expanding capital structure: Demonstrated commitment to low leverage Reduced reliance on commercial banks RBL limit of 3.5x Reduced utilisation of RBL…
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…
APPENDIX
BECOMING THE LARGEST PRODUCER ON AIM NEARLY 20 YEARS IN THE MAKING Net 94,000Boe/d 19 Home to 98% of DGO wells Other Net Raised net equity Headquarters (Birmingham, AL) 70,000 Boe/d proceeds of 225 MM 18 to fund first pure non-…
SIGNIFICANT ACQUISITIONS SINCE FEB 2017 IPO ESTABLISH DGO AS A TOP PRODUCER IN APPALACHIA 6.8 MBoepd Current Production 94 Mboepd 8.8 MBoepd 35 MMboe 49 MMboe PDP Reserves PDP Reserves 0.5 Million Acres 1.5 Million Acres…
COMMITTED TO SHAREHOLDER RETURNS REGULAR AND INCREASING RETURNS TO SHAREHOLDERS 10% Div Yield(a) 180 0.16 Dividend Paid Dividend Declared 0.14 0.14 165 160 0.13 0.14 Share Buybacks 28 140 0.11 47 Dividends per Share…
HEDGE PORTFOLIO SUMMARY UPDATED AS OF 13 NOVEMBER 2019 Gas Oil NGL Volumes Avg Prices 35
APPENDIX: SECURITISATION
SUMMARY OF TERMS Issuer: Diversified ABS LLC, a wholly-owned subsidiary that fully consolidates for accounting purposes Operator & Manager: DGO Collateral: 21.6% of DGOs working interests in its gas and oil portfolio (upstream…
ILLUSTRATIVE EXCESS CASH FLOW TO RBL AS A RESULT OF LONG TERM HEDGING WITHIN THE SECURITISATION STRUCTURE, DGO CAN EXPECT TO RECEIVE STABLE CASH FLOWS EVEN IN A LOWER COMMODITY PRICE ENVIRONMENT Illustrative Excess Cash Flow to RBL…
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