Results of Fundraising

RNS Number : 5715M

Diversified Gas & Oil PLC

12 May 2020

 

THIS ANNOUNCEMENT IS RESTRICTED, FOR INFORMATION PURPOSES ONLY AND IS NOT FOR PUBLICATION , RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, AND DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION , RELEASE, DISTRIBUTION, OFFER OR SALE  WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

12 May 2020

Diversified Gas & Oil PLC

("DGO" or the "Company")

Results of Fundraising

Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids, and oil wells as well as midstream assets, announced on 11 May 2020 the details of a Proposed Fundraising and the Potential Acquisitions.

The Company is pleased to announce that it has conditionally raised gross proceeds of US$85.8 million (approximately £69.4 million) (US$81.7 million net of expenses, approximately £66.1 million net of expenses) from new and existing institutional investors (the "Fundraising"). The Fundraising comprised a placing (the "Placing") and subscriptions from US investors (the "Subscriptions") for an aggregate of 64,280,500 new ordinary shares (the "Fundraising Shares") at 108 pence per share ("Fundraising Price"). 

The Fundraising Shares represent 10% of the Company's existing issued share capital, and the Fundraising Price is equal to a 1.6% discount to the closing mid-market price of the Company's Ordinary Shares on 11 May 2020.

DGO consulted with a number of its major shareholders prior to the Placing and has respected the principles of pre-emption as far as possible through the allocation process. The Company is pleased by the strong support it has received from existing shareholders and new investors.

The net proceeds of the Fundraising are intended to be used to fund the equity portion of two Potential Acquisitions, which are expected to have an aggregate initial consideration of US$235 million in the event that both complete. The Potential Acquisitions include the purchase of certain upstream and midstream assets from Carbon Energy Corporation for an initial consideration of US$110 million, and certain upstream and midstream assets from EQT Corporation for an initial consideration of US$125 million. The assets contemplated by the Potential Acquisitions had combined 2019 adjusted net production of approximately 18 Mboepd (99% natural gas), representing approximately 20% of 2019 group net production. The Potential Acquisitions are expected to be immediately accretive to the Company's earnings and dividends per share, based on the Company's 2019 numbers, management's estimates for the assets, and the Fundraising.

Should the Company not close the Potential Acquisitions, the Company will determine the most appropriate use of the net proceeds, including potentially paying down amounts drawn on its revolving credit facility and/or investing in other acquisition opportunities aligned with its stated strategy.

Settlement for the Fundraising Shares , together with the admission of the Company's Ordinary Shares, as enlarged by the Fundraising Shares, to the Premium Listing Segment of the Official List of the Financial Conduct Authority (the "Official List") and the London Stock Exchange's Main Market (together, "Admission") is anticipated to take place at 8.00 a.m. on 18 May 2020. Settlement of the Fundraising is conditional upon, amongst other things, Admission becoming effective and upon the Placing Agreement not being terminated in accordance with its terms.  

The Fundraising Shares will be issued credited as fully paid and will, on issue, rank pari passu in all respects with the Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the enlarged share capital from Admission. Investors in the fundraising will also be eligible for the Q4 2019 and Q1 2020 dividends.

Stifel Nicolaus Europe Limited, Mirabaud Securities Limited and Credit Suisse Securities (Europe) Limited (together, the "Joint Global Coordinators") are acting as joint global coordinators and joint bookrunners in connection with the Fundraising. Cenkos Securities plc is acting as Nominated Adviser to the Company.

New Ordinary Shares to be issued pursuant to the Placing (the "Placing Shares") are 61,813,500. New Ordinary Shares to be issued pursuant to the Subscriptions (the "Subscription Shares") are 2,467,000.

Application for Admission and Trading

Applications will be made for admission of the entire ordinary share capital of the Company, as enlarged by the Placing Shares and the Subscription Shares, to the Premium Listing Segment of the Official List of the Financial Conduct Authority and to trading on the main market of the London Stock Exchange plc.

Total Voting Rights

Following Admission, the Company's total issued share capital will consist of 707,085,502 ordinary shares of one penny each. The Company does not hold any ordinary shares in treasury. Therefore, following Admission, the total number of voting rights in Diversified Gas & Oil Plc will be 707,085,502. This figure may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Capitalised terms not otherwise defined in the text of this Announcement have the meanings given in the Company's announcement dated 11 May 2020.

Commenting on the Potential Acquisitions and Fundraising, CEO, Rusty Hutson said:

"The completion of this fundraise, against the challenging economic and industry backdrop, reflects the unique proposition of DGO and the support that we have for our continued growth and value creation ambitions.  Our investment story is centered on low-risk cash flow and a commitment to shareholder returns, and our business model ensures we are able to deliver both, even in the current low commodity price environment.  We thank our new and existing shareholders for their support in this fundraise and look forward to progressing our due diligence for these acquisitions with the goal of closing both of these transactions."

Diversified Gas & Oil PLC Rusty Hutson Jr., Chief Executive Officer Brad Gray, Chief Operating Officer Eric Williams, Chief Financial Officer Teresa Odom, Vice President, Investor Relations www.dgoc.com	+ 1 [phone]
Cenkos Securities plc (Nominated Adviser) Russell Cook Katy Birkin	[phone]
Stifel Nicolaus Europe Limited (Joint Global Coordinator, Joint Bookrunner, Joint Broker) Callum Stewart Jason Grossman Simon Mensley Ashton Clanfield	[phone]
Mirabaud Securities Limited (Joint Global Coordinator, Joint Bookrunner, Joint Broker) Peter Krens Edward Haig-Thomas	[phone]
Credit Suisse (Joint Global Coordinator, Joint Bookrunner) Blake London Ben Lawrence Ryan Pickard Omri Lumbroso	[phone]
Buchanan (Financial Public Relations) Ben Romney Chris Judd Kelsey Traynor James Husband [e-mail]	[phone]

Important Notices

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN OR ANY JURISDICTION IN WHICH OR TO ANY OTHER PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH JURISDICTIONS.

This Announcement is not for public release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, South Africa, Japan or any other jurisdiction in which such release, publication or distribution would be unlawful. No public offering of the securities referred to herein is being made in any such jurisdiction or elsewhere.

This Announcement is not an offer of securities for sale in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold or transferred, directly or indirectly, in or into the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Placing Shares were being offered and sold by the Company outside the United States in offshore transactions as defined in, and pursuant to, Regulation S under the Securities Act ("Regulation S"). New ordinary shares were also offered and sold in the United States to certain institutional investors in the Subscriptions pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No public offering of the Placing Shares (as defined below) is being made in the United States.

No action has been taken by the Company, Credit Suisse Securities (Europe) Limited ("Credit Suisse"), Mirabaud Securities Limited ("Mirabaud") or Stifel Nicolaus Europe Limited ("Stifel" and, together with Credit Suisse and Mirabaud, the "Joint Global Coordinators") or any of their respective affiliates, or any of their respective directors, officers , partners, employees , advisers or agents (collectively, "Representatives") that would permit an offer of the new ordinary shares of the Company to be issued pursuant to the Placing (the " Placing Shares ") in any jurisdiction where action for that purpose is required. Persons receiving this Announcement are required to inform themselves about and to observe any restrictions contained in this Announcement. The distribution of this Announcement and the Placing and/or the offer or sale of the Placing Shares in certain jurisdictions may be restricted by law. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action. Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so.

Members of the public were not eligible to take part in the Placing. This Announcement is directed at and is only being distributed to persons: (a) in member states of the European Economic Area that are "qualified investors" within the meaning of Article 2(e) of Regulation (EU) 2017/1129 (the "Prospectus Regulation") ("Qualified Investors"); (b) in the United Kingdom, who (i) have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or fall within Article 49(2)(a) to (d) of the Order and (ii) are Qualified Investors; and (c) to whom they may otherwise lawfully be communicated (each such person in (a), (b), and (c), a "Relevant Person"). No other person should act or rely on this Announcement and persons distributing this Announcement must satisfy themselves that it is lawful to do so. By accepting the terms of this Announcement, you represent and agree that you are a Relevant Person. This Announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this Announcement or the Placing relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

No offering document, admission document or prospectus will be available in any jurisdiction in connection with the Placing and no such prospectus is required (in accordance with the Prospectus Regulation ) to be published.

This Announcement does not constitute, or purport to include the information required of, a disclosure document under Chapter 6D of the Australian Corporations Act 2001 (Cth) ("Corporations Act") and will not be lodged with the Australian Securities and Investments Commission. No offer of shares is or will be made in Australia pursuant to this Announcement, except to a person who is a "sophisticated investor" within the meaning of section 708(8) of the Corporations Act or a "professional investor" within the meaning of section 708(11) of the Corporations Act. If any shares are issued, they may not be offered for sale (or transferred, assigned or otherwise alienated) to investors in Australia for at least 12 months after their issue, except in circumstances where disclosure to investors is not required under Part 6D.2 of the Corporations Act.

Certain statements this Announcement are forward-looking statements with respect to the Company's expectations, intentions and projections regarding its future performance, strategic initiatives, anticipated events or trends and other matters that are not historical facts and which are, by their nature, inherently predictive, speculative and involve risks and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. All statements that address expectations or projections about the future, including statements about operating performance, strategic initiatives, objectives, market position, industry trends, general economic conditions, expected expenditures, expected cost savings and financial results, are forward-looking statements. Any statements contained in this Announcement that are not statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements, which may use words such as "expects", "anticipates", "plans", "intends", "projects", "indicates" ( or the negative thereof ) and similar expressions , are not guarantees of future performance and are subject to known and unknown risks and uncertainties . There are a number of factors including, but not limited to, commercial, operational, economic and financial factors, that could cause actual results, financial condition, performance or achievements to differ materially from those expressed or implied by these forward-looking statements . Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as changes in taxation or fiscal policy, future market conditions, currency fluctuations, price fluctuations in crude oil and natural gas, drilling and production results, reserves estimates, environmental and physical risks, the behaviour of other market participants, the actions of governments or governmental regulators, or other risks factors, such as changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation, recession and consumer confidence, on a global, regional or national basis. Given these risks and uncertainties , readers are cautioned not to place undue reliance on forward-looking statements . Forward-looking statements speak only as of the date of this Announcement. Each of the Company, the Joint Global Coordinators and Cenkos Securities plc ("Cenkos") expressly disclaims any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of a new information, future events or otherwise unless required to do so by applicable law or regulation.

In particular, no statement in this Announcement is intended to be a profit forecast or profit estimate and no statement of a financial metric (including estimates of adjusted EBITDA, profit before tax, free cash flow or net debt) should be interpreted to mean that any financial metric for the current or future financial years would necessarily match or exceed the historical published position of the Company and its subsidiaries. Certain statements in this Announcement may contain estimates. The estimates set out in this Announcement have been prepared based on numerous assumptions and forecasts, some of which are outside of the Company's influence and/or control, and is therefore inherently uncertain and there can be no guarantee or assurance that it will be correct. The estimates have not been audited, reviewed, verified or subject to any procedures by the Company's auditors. Undue reliance should not be placed on them and there can be no guarantee or assurance that they will be correct.

Credit Suisse is authorised by the Prudential Regulation Authority (the "PRA") and regulated by the PRA and the Financial Conduct Authority (the "FCA") in the United Kingdom. Cenkos , Mirabaud and Stifel are each authorised and regulated in the United Kingdom by the FCA. Each of the Joint Global Coordinators and Cenkos is acting exclusively for the Company and for no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for giving advice in relation to the Placing or any other matters referred to in this Announcement.

This Announcement is being issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by or on behalf of any of the Joint Global Coordinators or Cenkos (apart from the responsibilities or liabilities that may be imposed by the Financial Services and Markets Act 2000, as amended ("FSMA") or the regulatory regime established thereunder) or by their respective affiliates or any of their respective Representatives for the contents of this Announcement or any other written or oral information made available to or publicly available to any interested party or their respective advisers or any other statement made or purported to be made by or on behalf of any of the Joint Global Coordinators or Cenkos or any of their respective affiliates or any of their respective Representatives in connection with the Company, the Placing Shares or the Placing and any responsibility and liability whether arising in tort, contract or otherwise therefor is expressly disclaimed. No representation or warranty, express or implied, is made by any of the Joint Global Coordinators or Cenkos or any of their respective affiliates or any of their respective Representatives as to the accuracy, fairness, verification, completeness or sufficiency of the information or opinions contained in this Announcement or any other written or oral information made available to or publicly available to any interested party or their respective advisers, and any liability therefor is expressly disclaimed.

This Announcement does not constitute a recommendation concerning any investor's options with respect to the Placing. Recipients of this Announcement should conduct their own investigation, evaluation and analysis of the business, data and other information described in this Announcement. This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Placing Shares. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult with his or her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, business, financial or tax advice.

Any indication in this Announcement of the price at which the Company's shares have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this Announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow of the Company for the current or future financial periods would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow of the Company.  

It is currently expected that trading in the Company's ordinary shares on AIM will be cancelled on 18 May 2020 and that the Company's ordinary shares, including the Fundraising Shares, will be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities on the same day. The Fundraising Shares to be issued pursuant to the Fundraising will not be admitted to trading on any stock exchange other than the main market for listed securities of the London Stock Exchange.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into , or forms part of , this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdictions outside the United Kingdom.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Joint Global Coordinators will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels. Dealing Codes:

Ticker: DGOC.L

ISIN for the Ordinary Shares: GB00BYX7JT74

SEDOL for the Ordinary Shares: BYX7JT7

Company's legal entity identifier: 213800YR9TFRVHPGOS67

 

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