Asset A&D

Diversified Gas & Oil Acquires Certain Haynesville Play Gas Assets from Indigo Minerals

By Isha Makkar
April 30, 2021
2 minutes read
Drill Pipes

LSE-listed Diversified Gas & Oil Plc (DGOC) has entered into a Purchase and Sale Agreement (PSA) with Indigo Minerals LLC, a wholly-owned subsidiary of privately-held Indigo Natural Resources LLC, to acquire approximately 180,000 net acres of Cotton Valley/Haynesville play assets located in north-west Louisiana and east Texas for a gross purchase price of US$135 million. The transaction represents DGOC’s strategic entry into a new central regional focus area (RFA) that includes producing areas within Louisiana, Texas, Oklahoma, and Arkansas.

The acreage acquired contains approximately 815 wells, with an average age of 17 years. The assets offer significant opportunity to grow scale through complementary bolt-on opportunities, and have substantial existing infrastructure. Total proved (1P) reserves attributable to the acreage are approximately 305 billion cubic feet equivalent (Bcfe) as of March, 2021, with the current average daily production amounting to approximately 95 million cubic feet equivalent per day (MMcfe/d). DGOC will retain approximately 25 field personnel currently servicing the wells to ensure operational continuity and smooth integration.

“Our new regional focus area covers a multi-state area in a similar size footprint to Appalachia, and meets our expansion criteria in terms of asset quality, infrastructure, market dynamics, opportunity set and supportive regulatory environment,” commented Rusty Hutson, CEO of DGOC.
“This first strategic acquisition outside of Appalachia also reflects our continued commitment to a consistent asset profile and valuation while affording us expanded value-accretive roll-up opportunities in this new region that will enable us to quickly build scale and drive efficiencies,” he added.

Alabama-based DGOC is focused on the acquisition, development, and operation of producing gas and oil wells in the Appalachian basin in Pennsylvania, Ohio, and West Virginia.

Indigo Natural Resources is focused on natural gas production from the Haynesville Shale, Bossier Shale, and Holly Vaughn Formations in North Louisiana. In addition, Indigo Natural Resources owns 50% of M5 Louisiana Gathering LLC, which owns gathering pipelines and processing facilities in the core of Indigo’s acreage.

The transaction is subject to customary closing conditions, including customary diligence, reviews and approvals and is expected to close in late May 2021, with an effective date of March 1st, 2021.

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