Diversified Energy Company · NYSE:DEC
Diversified Energy — Diversified Gas & Oil — H1 2017 Earnings Presentation
24 slides from Diversified Energy's earnings presentation, Sep 11, 2017
Slide 1: 2017 Interim Results
2017 Interim Results 11 September 2017 Rusty Hutson Chief Executive Officer Eric Williams Chief Financial Officer
Slide 2: Disclaimer
Disclaimer The information contained in this document has been prepared by Diversified Gas & Oil PLC (the “Company”). This document is being made available for information purposes only and does not constitute an offer or invitation for the sale or purchase of securities or any of the assets describ
Slide 3: A Unique Opportunity
A Unique Opportunity Established, Profitable, Proven & Growing • ~11,040 net barrels of oil equivalent production per day • ~59.4 barrels of oil equivalent proved-developed-producing reserves Differentiated • US onshore operations • Stable producer • Low political and operational risk • Low cost • C
Slide 4: Appalachian Basin
Appalachian Basin CONVENTIONAL ONSHORE OIL AND GAS PRODUCTION IN THE APPALACHIAN REGION OF THE USA Oldest hydrocarbon Over 1 million wells drilled Abundant Geologically comprised of prolific unconventional shale producing region in US high industry success rate infrastructure in Marcellus/Utica and
Slide 5: Company History
Company History SIGNIFICANTLY INCREASED PRODUCTION GROWTH DRIVEN BY Mcfe/ EXECUTION OF SUCCESSFUL ROLL-UP STRATEGY 109,800 day ‘17 Feb: Floated on AIM raising Mcfe/ $50m – largest UK O&G 26,000 day IPO since April 2014 Mcfe/ Apr: Mcfe/ 11,000 day ‘16 Acquired 1,300 producing Mcfe/ 7,000 day wells in
Slide 6: Strategy
Strategy ACQUIRE, PRODUCE, DRILL Large energy players looking to reduce operating expenses and re-focus on shale only Target PDP Target: predictable production rates, long-life (50+ years), acquisitions low declines and compelling valuation metrics Acquire and manage oil Geographically agnostic and
Slide 7: Achieving Scale Through Acquisition
Achieving Scale Through Acquisition Unique Strong Limited Efficient Market Reputation Competition Assets Dynamics • DGO was founded in • Few operators focused • Long-life, gas-heavy 2001 and has deep on acquiring mature production can be • Larger independents roots in the industry production streams
Slide 8: Production (Mcfe/d)
Proven Success Growing the Asset Base & Production – ~90% CAGR since 2013 ~17,000 Operated, Producing Wells 2013 Baseline legacy 109,800 Mcfe/d Fund 1 18,000 120,000 Broadstreet +142% Texas Keyston Eclipse 16,000 Seneca EnerVest Titan 30June 100,000 Titan 30Sept 14,000 Production (Mcfe/d) 12,000 80,
Slide 9: Compelling, EBITDA-Accretive Valuations
Compelling, EBITDA-Accretive Valuations $/flowing mcfepd Improving climate $12,000 % Below Peak Price per Flowing Mcfe/d .x for value accretive acquisitions Industry Shift to Horizontal, Unconventional Development ~2012 -.2x Peak Price -2.x -1.7x Regional reputation $10,000 -5.x as credible purchase
Slide 10: Successful AIM IPO
Stated Objectives at IPO… DELIVERED; Creating Value for Shareholders • Largest O&G listing in the past 2 years Successful AIM IPO • One of only two O&G (out of 90) AIM listings to pay a dividend • $85m of equity raised in 2017 Financially Strong • $75m of liquidity at 30 June 2017 Significant Produc
Slide 11: Financial and Strategic Review
Financial and Strategic Review 11
Slide 12: H1'17 Financial Performance
H1’17 Financial Performance Total Revenue Net Debt / Adjusted EBITDA $35.0 18.0 +293% $30.0 16.0 14.0 $25.0 12.0 $ millions Multiple $20.0 10.0 $15.0 +51% $30.1 8.0 16.2x 6.0 $10.0 4.0 $5.0 $11.5 -91% $7.7 2.0 $- - 1.4x H1 '16 H1 '17 H1 '17 H1 '16 H1 '17 Reported Pro forma (a) Pro forma (a) Adjusted
Slide 13: Balance Sheet Highlights
Balance Sheet Highlights Gas and Oil Properties, net Cash and Cash Equivalents $200.0 $35.00 +130% +147,095% $30.00 $150.0 $25.00 $ millions $ millions $20.00 $100.0 $176.5 $15.00 $29.4 $50.0 $10.00 $76.8 $5.00 $0.02 $- $- H1 '16 H1 '17 H1 '16 H1 '17 Total Equity Total Borrowings, net of Deferred Fi
Slide 14: Financial Positioning
Financial Positioning Capitalization ($m) Net Debt 30 June 2017 $40.0 Cash & Cash Equivalents $29.4 $39.0 $38.0 Senior Secured Credit Facility $64.0 $37.0 Total Shareholders’ Equity $87.1 $36.0 Total Capitalization $151.1 $38.8 $35.0 -11% Liquidity $34.0 $34.6 Cash & Cash Equivalents $29.4 $33.0 (a)
Slide 15: Titan Energy Acquisition Pro forma Highlights
Titan Energy Acquisition Pro forma Highlights Producing Wells Acres Held by Production 20,000 +142% 1,800 18,000 +45% 1,600 16,000 1,400 Acres (in thousands) Producing Wells 14,000 12,000 1,200 10,000 1,000 17,691 800 8,000 1,600 6,000 600 1,100 4,000 7,308 400 2,000 200 - Legacy DGO Pro forma - Leg
Slide 16: Strategic Objectives
Strategic Objectives OPERATIONAL AND CORPORATE ACTIVITY GROW • Screen further complementary acquisition opportunities FUND • Develop a capital efficient funding platform INTEGRATE • Complete integration of Titan assets and operations OPTIMIZE • Review combined asset portfolio to assess operational a
Slide 17: Appendix
Appendix S&S DIVERSIFIED GAS & OIL PL ¢ — Se
Slide 18: The Management Team
The Management Team INDUSTRY AND CAPITAL MARKETS EXPERIENCE Years of Name Position Profile Experience ▪ Founded DGO in 2001 ▪ 4th generation oil and gas Robert “Rusty” Hutson, Jr. Chief Executive Officer 25 ▪ 13 years in finance and accounting in the banking industry, CPA ▪ Field operations, investo
Slide 19: The Board
The Board INDUSTRY AND CAPITAL MARKETS EXPERIENCE Name Position Profile Shares Held ▪ Joined DGO in 2005 as 50% owner with Rusty Huston 20,000,000 Robert Post Non-Executive Chairman ▪ Successful business entrepreneur and industrial operations experience (13.8%) ▪ B.S. degree in Accounting from Jacks
Slide 20: Hedge Portfolio
Hedge Portfolio Derivative Financial Remaining Ending Swap Floor Short Put Ceiling Instrument Type Volumes Month Price Price Price Price Natural Gas Swap 307,500 MMBTUs Oct-17 $ 3.38 $ — $ — $ — Swap 1,500,000 MMBTUs Oct-17 2.92 - - - Swap 6,000,000 MMBTUs Mar-19 2.89 - - - Swap 900,000 MMBTUs Nov-1
Slide 21: Our Assets
Our Assets LOW-RISK, LOW-COST, LONG-LIFE ASSETS Low risk, low decline producing gas and oil assets Shallow depth, vertical wells into low permeability reservoirs sitting above the shale Mature wells benefitting from: • Low maintenance costs • Low ongoing capex • Low water production Low decline rate
Slide 22: Distribution Network
Distribution Network ESTABLISHED AND GROWING INFRASTRUCTURE Benefits from a strong infrastructure network enabling easy route to market for DGO’s products Separation units at site – oil trucked directly to market, gas delivered through flow-lines to processing facilities before using surrounding thi
Slide 23: Organic Growth
Organic Growth INFILL DRILLING OPPORTUNITY • Substantial 1.6 million+ acre land bank, only sparsely drilled (~100 acre well spacing) • Low risk, low cost development. 150 wells drilled to date, no dry holes. $250k-$350k/well to drill & hook up • IP rates ~125 mcfepd per well, much shallower decline
Slide 24: Contact Us
C O N TA C T U S 1100 CORPORATE DRIVE SMITH & WILLIAMSON MIRABAUD (LEAD BROKER): BIRMINGHAM, ALABAMA 35242 (USA) (NOMAD AND JOINT BROKER): PETER KRENS RUSSELL COOK / KATY BIRKIN TEL: 020 7321 2508 PHONE 1-205-408-0909 TEL: 020 7131 4000 FAX 1-205-408-0870 WWW.DIVERSIFIEDGASANDOIL.COM
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