Diversified Gas & Oil (DGO) has finalised a $575m agreement to acquire certain gas and oil assets in the Appalachian Basin, US, from EQT.
The development follows DGO’s signing of a letter of intent (LoI) for the acquisition earlier this month.
DGO has arranged funds for the deal through an extension to its existing loan facility via a five-year, senior secured credit facility from KeyBank National Association and a syndicate of lenders for up to $1bn.
The deal is subject to approval by shareholders.
DGO also placed 195.3 million shares at 97p per share to raise a sum of $250m in support of the initiative.
The acquisition is expected to more than double the rate of production to around 60 thousand barrels of oil equivalent per day (kboepd), as well as increase the total amount of PDP Reserves to 393 million barrels of oil equivalent (mmboe).
Diversified Gas & Oil CEO Rusty Hutson said: “This transaction is yet another game-changer for us as we double our production once again to become one of the largest producers listed in the London market.
“We look forward to completing the acquisition of these assets, integrating and optimising them within our existing portfolio, and leveraging our vastly increased financial profile to deliver reliable and sustainable returns to our shareholders through our proven dividend model.”
DGO’s new market capitalisation is anticipated to be approximately $648.7m based on the placing price.
The company has received undertakings from shareholders regarding around 73.9% of its voting share capital to vote in favour of the acquisition and placing development.
The transaction is expected to be immediately accretive with respect to cash and earnings.