In early 2017, Mirabaud acted as bookrunner on the IPO of Diversified Gas & Oil on AIM. The company successfully raised US$50m of fresh equity, becoming the first major E&P floatation since the 2014 oil price collapse. More recently, Mirabaud has acted as joint bookrunner in three subsequent equity transactions raising ~US$474m in aggregate, significantly expanding the shareholder register and creating one of the largest London-listed E&P businesses by production. In addition, Mirabaud has acted as joint bookrunner in a secondary sell down of US$32m worth of stock held by PE firm Trive Capital.
Diversified Gas and Oil’s strategy is built around buying up unloved mature conventional gas wells in the Appalachian basin (onshore US) known as stripper wells. Typically the sellers are large, 'drill and build' shale gas companies who view the assets as non-core and are prepared to sell on attractive terms (2-4x EBITDA) that are highly accretive to cash flow & NAV. DGOC looks to sweat these acquired assets for cash, minimising costs and working to optimise production where possible, capitalising on opportunities left behind by previous owners. The company does not spend money on drilling new wells but rather tries to manage its well stock as efficiently as possible with a view to paying healthy dividends to shareholders (40% of FCF).
Backed by a blue chip institutional register, DGOC has undergone a period of exponential acquisitive growth, increasing its EBITDA run-rate 20 fold from <$10m to >$250m in the past 24 months. It now pumps more than ~70 kboepd of gas/NGLs and oil across five states from Ohio to Kentucky, having executed ~US$1bn of acquisitions.