31 May 2016
Diversified Gas & Oil Plc
("DGO" or the "Company")
Audited Annual Results for the year ended 31 December 2015
Diversified Gas & Oil Plc (ISDX: DOIL), are delighted to report its audited annual results for the twelve months ended 31 December 2015.
Chairman's statement
We are delighted to be able to report on a successful year for Diversified Gas & Oil, PLC, one in which we believe will prove significant in the Group's future development.
Results
Although natural gas and crude oil prices remained depressed in 2015, the Group maintained revenues of $6.3m, after the effect of the Mark to Market on Derivatives (2014: $7.4m), fuelled by the growth of natural gas and crude oil production through two significant acquisitions. Operating profit saw an increase to $4.6m (2014: $2.7m), credited to obtaining natural gas and crude oil production at bargain prices over its fair market value of $6.6m (2014: $914k). The Group's net loss was $396k (2014: $235k loss), after including the one-off, non-cash accrued interest charge of $925k, which was subsequently eliminated in 2016.
Key Highlights and Developments during year
Acquisitions
The Group continues to operate conventional natural gas and crude oil properties in the footprint of the Appalachian Basin of the United States. During 2015, in order to maintain a constant revenue stream in a time of commodity price decline, we focused on acquiring an additional 2,100 natural gas and crude oil wells at bargain prices. 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 cost. The acquisitions added 7,500 MCF/day of natural gas, 35 BBL/day of crude oil, and 1,200 BBL/day of water to current productions.
Listing on ISDX
One of the key developments of the year was the Group's admission to trading bonds on the ISDX in June 2015. During 2015, the Group raised £4.2m through the bond listing (approximately $6.4m). At the time of the listing, we stated that the funds would be used to acquire additional natural gas and crude oil production. We are pleased to report that we have put the funds to use by increasing our natural gas and crude oil properties fair market value to $50.9m (2014: $31.1m), growth of 64%.
Outlook
Continuing into 2016, we have and will continue to remain acquisition focused. In 2016 to date, the Group has acquired 1,300 additional wells producing 3,000 MCF/day of natural gas and 250 BBL/day of crude oil. 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 in 2015. The Board and senior management are looking forward to a successful 2016.
Rusty Hutson
Chief Executive Officer
31 May 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 - Institutional Sales
Telephone: +44 (0) 20 7448 9820
http://www.ad-securities.com
49 Queen Victoria Street, London EC4N 4SA
DIVERSIFIED GAS & OIL PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
| Year ended 31 December 2015 | Year ended 31 December 2014 | |||
| $'000 | $'000 | |||
| Revenue | 6,304 | 7,358 | ||
| Cost of sales | (4,251) | (3,559) | ||
| Depreciation, depletion and amortization | (3,388) | (2,160) | ||
| Gross (loss)/profit | (1,335) | 1,639 | ||
| Administrative expenses | (1,016) | (971) | ||
| Loss on disposal of property and equipment | (2) | (7) | ||
| (Loss)/Gain on derivative financial instruments | 402 | 1,091 | ||
| Gain on bargain purchase | 6,582 | 914 | ||
| Operating profit | 4,631 | 2,666 | ||
| Finance costs | (3,177) | (2,734) | ||
| Finance costs, accrued | (925) | - | ||
| Accretion of decommissioning provision | (366) | (170) | ||
| Potential initial public offering charges | (576) | - | ||
| Loss before taxation | (413) | (238) | ||
| Taxation on loss | - | - | ||
| Loss after taxation | (413) | (238) | ||
| Other comprehensive income attributable to the equity holders of the parent Gain on foreign currency conversion | 17 | 3 | ||
| Total comprehensive loss for the year attributable to the equity holders of the parent | (396) | (235) | ||
| Earnings per share - basic and diluted (US$) | (0.01) | (0.01) | ||
| EBITDA, adjusted | 2,590 | 3,337 | ||
DIVERSIFIED GAS & OIL PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2015
| 2015 | 2014 | |||
| $'000 | $'000 | |||
| ASSETS | ||||
| Non-current assets | ||||
| Oil and gas properties | 42,353 | 31,056 | ||
| Property and equipment | 2,110 | 1,211 | ||
| Restricted cash | 115 | 90 | ||
| 44,578 | 32,357 | |||
| Current assets | ||||
| Trade receivables | 1,759 | 1,151 | ||
| Derivative financial instruments | 17 | 876 | ||
| Other current assets | 43 | 22 | ||
| Cash and cash equivalents | 90 | 34 | ||
| 1,909 | 2,007 | |||
| Total Assets | 46,487 | 34,440 | ||
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Share capital | 630 | 611 | ||
| Merger reserve | (478) | (478) | ||
| Accumulated losses | (8,969) | (7,470) | ||
| Total Equity attributable to the owners of the parent | (8,817) | (7,337) | ||
| Non-current liabilities | ||||
| Decommissioning provision | 8,869 | 3,466 | ||
| Capital lease | 58 | - | ||
| Borrowings | 20,115 | 13,559 | ||
| Other liabilities | 277 | 302 | ||
| 29,319 | 17,327 | |||
| Current liabilities | ||||
| Trade and other payables | 2,869 | 3,352 | ||
| Borrowings | 22,821 | 20,806 | ||
| Capital lease | 115 | - | ||
| Other liabilities | 180 | 292 | ||
| 25,985 | 24,450 | |||
| Total Liabilities | 55,304 | 41,777 | ||
| Total Liabilities and Equity | 46,487 | 34,440 | ||
DIVERSIFIED GAS & OIL PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
| Share capital | Merger reserve | Retained earnings | Total equity | ||
| $'000 | $'000 | $'000 | $'000 | ||
| Balance as of 1 January 2014 | 611 | (478) | (5,189) | $ (5,056) | |
| Loss after taxation | - | - | (238) | (238) | |
| Gain on foreign currency conversion | - | - | 3 | 3 | |
| Total comprehensive loss for the period | - | - | (235) | (235) | |
| Stockholder contributions pre group reconstruction | - | - | 554 | 554 | |
| Stockholder distributions pre group reconstruction | - | - | (2,600) | (2,600) | |
| Transactions with owners | - | - | (2,046) | (2,046) | |
| Balance as of 31 December 2014 | 611 | (478) | (7,470) | $ (7,337) | |
| Loss after taxation | - | - | (413) | (413) | |
| Gain on foreign currency conversion | - | - | 17 | 17 | |
| Total comprehensive loss for the period | - | - | (396) | (396) | |
| Stockholder contributions pre group reconstruction | - | - | 1,296 | 1,296 | |
| Stockholder distributions pre group reconstruction | - | - | (2,399) | (2,399) | |
| Issuance of share capital | 19 | - | - | 19 | |
| Transactions with owners | 19 | - | (1,103) | (1,084) | |
| Balance as of 31 December 2015 | 630 | (478) | (8,969) | (8,817) |
DIVERSIFIED GAS & OIL PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
| 2015 | 2014 | |||
| $'000 | $'000 | |||
| Cash flows from operating activities | ||||
| Loss after taxes and comprehensive income | $ (396) | $ (235) | ||
| Adjustments to add (deduct) non-cash items: | ||||
| Depreciation, depletion and amortization | 3,388 | 2,531 | ||
| Accretion of decommissioning provision | 366 | 169 | ||
| Loss/(Gain) on derivative financial instruments | 859 | (1,440) | ||
| Gain on oil and gas program | (344) | (529) | ||
| Gain on bargain purchase | (6,582) | - | ||
| Loss on disposal of property and equipment | 2 | 7 | ||
| Working capital adjustments: | ||||
| Change in trade receivables | (589) | 288 | ||
| Change in other current assets | (26) | (4) | ||
| Change in trade and other payables | (427) | 874 | ||
| Change in other liabilities | (182) | (123) | ||
| Net cash (used in)/provided by operating activities | (3,931) | 1,538 | ||
| Cash flows from investing activities | ||||
| Expenditures on oil and gas properties | (2,513) | (159) | ||
| Expenditures on property and equipment | (1,216) | (256) | ||
| Increase in restricted cash | (25) | - | ||
| Proceeds on disposal of oil and gas properties | 105 | 610 | ||
| Proceeds on disposal of property and equipment | - | 2 | ||
| Net cash (used in)/provided by investing activities | (3,649) | 197 | ||
| Cash flows from financing activities | ||||
| Proceeds from borrowings | 10,090 | 2,540 | ||
| Repayment of borrowings | (844) | (348) | ||
| Financing expense | (680) | (744) | ||
| Proceeds from capital lease | 192 | - | ||
| Repayment of capital lease | (19) | - | ||
| Contributions from stockholders | 1,296 | 54 | ||
| Dividends to stockholders pre group reconstruction | (2,399) | (3,515) | ||
| Net cash provided by/(used in) financing activities | 7,636 | (2,013) | ||
| Net increase/(decrease) in cash and cash equivalents | 56 | (278) | ||
| Cash and cash equivalents - beginning of period | 34 | 312 | ||
| Cash and cash equivalents - end of period | $ 90 | $ 34 | ||
