Source - PRN

28 September 2016

Diversified Gas & Oil Plc

(“DGO” or the “Company”)

Interim Results for the year ended 30 June 2016

Diversified Gas & Oil Plc (ISDX: DOIL), are delighted to report its interim results for the six months ended 30 June 2016.

Chairman’s statement

We are delighted to be able to report on another successful 6 months for Diversified Gas & Oil, PLC, as evidenced by the continued acquisition of conventional assets during the interim period and the increase in revenue that were a direct result of the Group’s acquisition strategy.  

Results

Revenues for the first 6 months of 2016 were $7.6 million, up from $2.9 million for the same period of 2015.  The increase was attributable to three acquisitions closed since June 2015 and the increase in production associated with the assets.  Operating profit was $23.9 million (6m 2015: $713k loss) credited to obtaining natural gas and crude oil production at bargain prices over its fair market value of $24.2 million. Net Income was $36.5 million (6m 2015: $2.2m loss) which was spurred by the settlement of mezzanine debt with the lending group which resulted in a gain on debt cancellation of $14.1 million.  Excluding the impact of these one-time gains along with other non-cash transactions the EBITDA of the company was $1.3 million (6m 2015: $965k).

Key Highlights and Developments during year

Acquisitions

The Group continues to operate conventional natural gas and crude oil properties in the Appalachian Basin of the United States. During the first 6 months of 2016, the company acquired approximately 3,700 natural gas and crude oil wells producing 13,500 MCF/day of natural gas and 295 barrels of oil per day. Because we currently operate properties in the same geographical footprint, we were able to roll the newly acquired wells into operations seamlessly, while adding minimal additional overhead cost.  The purchase price of the two deals resulted in bargain gains under the accounting rules due to the purchase price being significantly lower than the fair market value of the producing properties.  The Group continues to evaluate further opportunities within the footprint of the existing operations.

Listing on ISDX

The Group continues to have success raising capital through bond sales on the ISDX Growth Market. During the first 6 months of 2016, the Group raised £5.3m through bond placings (approximately $7.3m). These placings have been utilized to acquire producing assets at bargain prices and have assisted in increasing the value of our oil and gas portfolio.

Outlook

Continuing for the remainder of 2016, we have and will continue to remain acquisition focused. Management will evaluate opportunities to add producing wells, allowing cash flow to increase while continuing to maintain a low operating cost.

Notes of Appreciation

I wish to once again thank our customers, stakeholders and business partners for their support of the Group. The Board and senior management are looking forward to a successful remainder of 2016.

Rusty Hutson
Chief Executive Officer
27 September 2016
The directors of Diversified Gas and Oil Plc accept responsibility for this announcement.

COMPANY CONTACT DETAILS:

Rusty Hutson, Chief Executive Officer
Diversified Gas & Oil
100 Corporate Ridge,
Suite 100
Birmingham,
Alabama 35242
USA
Telephone: + 1 205 408 0909
http://www.diversifiedgasandoil.com/

ISDX CORPORATE ADVISER:
Alexander David Securities Limited
David Scott – Corporate Finance
James Dewhurst – Corporate Brokerage   
Telephone: +44 (0) 20 7448 9820
http://www.ad-securities.com

49 Queen Victoria Street, London EC4N 4SA


DIVERSIFIED GAS & OIL PLC
INTERIM CONSOLIDATED STATEMENS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS TO 30 JUNE 2016

Unaudited
6 months to
30 June 2016
Unaudited
6 months to
30 June 2015
$’000 $’000
Revenue 7,653 2,918
Cost of sales (6,227) (1,675)
Depreciation, depletion and amortization (1,584) (1,360)
Depreciation of decommissioning provision –
change in significant estimates
1,077 -
Gross profit/(loss) 919 (117)
Administrative expenses (887) (278)
Loss on disposal of property and equipment - (2)
Loss on derivative financial instruments (308) (316)
Gain on bargain purchase 24,212 -
Operating profit/(loss) 23,936 (713)
Finance costs (1,371) (1,381)
Gain on debt cancellation 14,149 -
Accretion of decommissioning provision (223) (108)
Income/(Loss) before taxation 36,491 (2,202)
Taxation on income/(loss) - -
Income/(Loss) after taxation 36,491 (2,202)
Other comprehensive income attributable to the equity holders of the parent
Gain on foreign currency conversion
603 8
Total comprehensive income/(loss) for the year attributable to the equity holders of the parent 37,094 (2,194)
Earnings per share – basic and diluted (US$) 0.93 (0.05)
EBITDA, adjusted 1,314 965



DIVERSIFIED GAS & OIL PLC
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2016

30 June
2016
31 December
2015
$’000 $’000
ASSETS
Non-current assets
Oil and gas properties 79,864 42,353
Property and equipment 2,798 2,110
Restricted cash 117 115
82,779 44,578
Current assets
Trade receivables 3,336 1,759
Derivative financial instruments - 17
Other current assets 118 43
Cash and cash equivalents 20 90
3,474 1,909
Total Assets 86,253 46,487
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital 630 630
Merger reserve (478) (478)
Retained earnings/(Accumulated losses) 27,587 (8,969)
Total Equity attributable to the owners of the parent                      27,739                      (8,817)
Non-current liabilities
Decommissioning provision 14,798 8,869
Capital lease 115 58
Borrowings 9,592 20,115
Other liabilities 358 277
24,863 29,319
Current liabilities
Trade and other payables 3,537 2,869
Derivative financial instruments 682 -
Borrowings 29,194 22,821
Capital lease 113 115
Other liabilities 125 180
33,651 25,985
Total Liabilities              58,514                  55,304
Total Liabilities and Equity 86,253 46,487



DIVERSIFIED GAS & OIL PLC
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016

Share
capital
Merger
reserve
Retained
earnings
Total
equity
$’000 $’000 $’000 $’000
Balance as of 1 January 2016 630 (478) (8,969) $      (8,817)
Income after taxation - - 36,491 36,491
Gain on foreign currency conversion - - 603 603
Total comprehensive loss for the period - - 37,094 37,094
Stockholder distributions - - (538) (538)
Issuance of share capital - - - -
Transactions with owners - - (538) (538)
Balance as of 30 June 2016 630 (478) 27,587 27,739
Balance as of 1 January 2015 611 (478) (7,470) (7,337)
Income after taxation - - (2,202) (2,202)
Gain on foreign currency conversion - - 8 8
Total comprehensive loss for the period - - (2,194) (2,194)
Stockholder contributions - - 306 306
Issuance of share capital 19 - - 19
Transactions with owners 19 - 306 325
Balance as of 30 June 2015 630 (478) (9,358) (9,206)



DIVERSIFIED GAS & OIL PLC
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2016

Unaudited
6 months to
30 June 2016
Unaudited
6 months to
30 June 2015
$’000 $’000
Cash flows from operating activities
Income (Loss) after taxes and comprehensive income 36,491                 (2,202)
Adjustments to add (deduct) non-cash items:
Depreciation, depletion and amortization 507 1,360
Accretion of decommissioning provision 223 107
Loss on derivative financial instruments 699 316
Gain on oil and gas program (84) -
Gain on bargain purchase (24,212) -
Gain on debt cancellation (14,149) -
         Deferred financing expense 688 -
Loss on disposal of property and equipment - 2
   Working capital adjustments:
Change in trade receivables (1,145) (465)
Change in other current assets (71) (10)
             Change in trade and other payables 543 1,563
             Change in other liabilities 129 21
Net cash (used in)/provided by operating activities (381) 692
Cash flows from investing activities
Expenditures on oil and gas properties (8,642) (2,669)
Expenditures on property and equipment (155) (34)
Increase in restricted cash (2) -
    Proceeds on disposal of oil and gas properties 93 -
Net cash used in investing activities (8,706) (2,703)
Cash flows from financing activities
Proceeds from borrowings 19,241 3,212
Repayment of borrowings (7,199) (304)
Financing expense (2,541) (438)
Proceeds from capital lease 133 -
Repayment of capital lease (79) -
Stockholder contributions - 306
    Stockholder distributions (538) -
Net cash provided by financing activities 9,017 2,776
Net (decrease)/increase in cash and cash equivalents (70) 765
Cash and cash equivalents - beginning of period 90 34
Cash and cash equivalents - end of period                   20 799