Updates

Diversified Gas & Oil - 475% jump in EBITDA underpins double digit yield

September 2019

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Diversified Gas & Oil (DGOC) announced strong first half results (to end June) with production rising 292% to 75,696 barrels oil equivalent per day while adjusted cash profits (EBITDA) rose 475% to US$131m. Average realized gas prices rose from US$2.40 per 1,000 cubic feet gas to US$2.66. While gas prices have tracked Brent crude oil lower, DGOC’s policy is to hedge significant future output and its hedge portfolio is valued at US$60.6m, providing good protection from any falls. EBITDA margins were unchanged at 54%.Strong cash flow also meant it paid US$400m for the major acquisition of assets from HG Energy (completed this April), and yet it still paid down US$2m debt, leaving net debt at US$613m against total borr ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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