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DJ Diversified Gas & Oil Corp. Interim Results for the year ended 30 June 2016

 
TIDMDOIL 
 
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 GBP5.3m 
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          Unaudited 
                                                        6 months to        6 months to 
                                                       30 June 2016       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 -                   1,077                  - 
change in significant estimates 
 
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                  603                  8 
equity holders of the parent 
Gain on foreign currency conversion 
 
Total comprehensive income/(loss) for the year               37,094            (2,194) 
attributable to the equity holders of the 
parent 
 
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         31 December 
                                                              2016                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       Merger      Retained         Total 
                                     capital      reserve      earnings        equity 
 
                                       $'000        $'000         $'000         $'000 
 
Balance as of 1 January                  630        (478)       (8,969)       $ 
2016                                                                          (8,817) 
 
Income after taxation                      -            -        36,491        36,491 
 
Gain on foreign currency                   -            -           603           603 
conversion 
 
Total comprehensive loss                   -            -        37,094        37,094 
for the period 
 

(MORE TO FOLLOW) Dow Jones Newswires

September 28, 2016 06:00 ET (10:00 GMT)

DJ Diversified Gas & Oil Corp. Interim Results for -2-

Stockholder distributions                  -            -         (538)         (538) 
 
Issuance of share capital                  -            -             -             - 
 
Transactions with owners                   -            -         (538)         (538) 
 
Balance as of 30 June                    630        (478)        27,587        27,739 
2016 
 
Balance as of 1 January                  611        (478)       (7,470)       (7,337) 
2015 
 
Income after taxation                      -            -       (2,202)       (2,202) 
 
Gain on foreign currency                   -            -             8             8 
conversion 
 
Total comprehensive loss                   -            -       (2,194)       (2,194) 
for the period 
 
Stockholder contributions                  -            -           306           306 
 
Issuance of share capital                 19            -             -            19 
 
Transactions with owners                  19            -           306           325 
 
Balance as of 30 June                    630        (478)       (9,358)       (9,206) 
2015 
 
 
 
DIVERSIFIED GAS & OIL PLC 
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE SIX MONTHS ENDED 30 JUNE 2016 
 
                                                          Unaudited          Unaudited 
                                                        6 months to        6 months to 
                                                       30 June 2016       30 June 2015 
 
                                                              $'000              $'000 
 
Cash flows from operating activities 
 
Income (Loss) after taxes and comprehensive                  36,491 
income                                                                         (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                          543              1,563 
payables 
 
             Change in other liabilities                        129                 21 
 
Net cash (used in)/provided by operating                      (381)                692 
activities 
 
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                          93                  - 
properties 
 
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                       (70)                765 
equivalents 
 
Cash and cash equivalents - beginning of                         90                 34 
period 
 
Cash and cash equivalents - end of period                                          799 
                                                                 20 
 
 
 
 
END 
 

(END) Dow Jones Newswires

September 28, 2016 06:00 ET (10:00 GMT)