Rusty Hutson Chief Executive Officer Eric Williams Chief Financial Officer October 2017 Investor Pr esentation
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 described in it nor shall they, nor any part of them, form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or otherwise engage in any investment activity (including within the meaning specified in section 21 of the Financial Services and Markets Act 2000). The information in this document does not purport to be comprehensive. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the Company or any of its officers, employees, agents or advisers as to, or in relation to, the accuracy or completeness of this document, and any such liability is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, management estimates or prospects contained in this document. Such forward-looking statements, estimates and forecasts reflect various assumptions made by the management of the Company and their current beliefs, which may or may not prove to be correct. A number of factors could cause actual results to differ materially from the potential results discussed in such forward-looking statements, estimates and forecasts including: changes in general economic and market conditions, changes in the regulatory environment, business and operational risks and other risk factors. Past performance is not a guide to future performance. The document is not a prospectus nor has it been approved by the London Stock Exchange plc or by any authority which could be a competent authority for the purposes of the Prospectus Directive (Directive 2003/71/EC). This document has not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. The information contained in this document is subject to change, completion or amendment without notice. However, the Company gives no undertaking to provide the recipient with access to any additional information, or to update this document or any additional information, or to correct any inaccuracies in it or any omissions from it which may become apparent. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements. This document does not constitute an offer to sell or an invitation to purchase securities in any jurisdiction. October 2017 1
A Unique Opportunity; Achieving Scale through Acquisitions Established, Profitable, Proven & Growing • Founded in 2001 by the CEO • 11,040 net barrels of oil equivalent (“Boe”) production per day • 90% CAGR of production over the past 4.5 years • 59.4 million Boe proved-developed-producing reserves ; Excludes all PUD, Probable and Possible reserves Differentiated • Low political and operational risk; 100% US onshore operations • Stable producer ; mature portfolio of shallow-decline wells • Low operating costs & maintenance capex; $1.19/Mcfe or $7.14/Boe (a) , trending lower as efficiencies are realized • Cash-flow positive ; Approaching 45% Adjusted EBITDA margin (a) , up 10 points from 35% reported for 1H17 Progressive Dividend • 40% dividend payout target of free cash flow • Maiden dividend paid 31 July 2017 ( 1.99 cents; 1.55 pence per share) • Second dividend declared September 2017; Pay Date of 20 December 2017 (1.99 cents per share) Value Creating • Deep relationships in the industry support consistent and accretive deal execution • History of success completing acquisitions ; ~$130 million of transactions completed • Strong balance sheet and liquidity position ; ~$23 million of cash (b) ; >$58 million of liquidity (b) • Operational excellence and local expertise maximize production (driving revenues) and reduce costs October 2017 2 Footnotes: (a) For the month of September 2017; (b) At September 30, 2017.
Appalachian Basin Widely known operators in the Region: Royal Dutch Shell, Chevron, Chesapeake, EQT CONVENTIONAL ONSHORE OIL AND GAS PRODUCTION IN THE APPALACHIAN REGION OF THE USA Oldest hydrocarbon Over 1 million wells drilled Abundant Geologically prolific, long-life shale source rock producing region in US high industry success rate infrastructure in Marcellus/Utica and conventional sandstone reservoirs Diversified, US based, income and growth investment Appalachian Basin October 2017 3
Our Assets LOW-RISK, LOW-COST, LONG-LIFE ASSETS Low risk (political & operational; US Onshore) producing gas and oil assets (Average Production Mix: 94% gas; 6% oil) Shallow depth (~3,000’ to ~6,000’), vertical wells into low permeability reservoirs sitting above the shale Mature wells benefitting from: • Low operating costs (~$1.19 LOE/mcfe; trending lower) (a) • Low ongoing/maintenance capex (~$1.0m - $1.5m/year) • Low water production (~1/3 Bbl per well per day) Low decline rates averaging 3-5% per annum, enabling a high quality and reliable stream of free cash flow Long well life +50 years Attractive fiscal regime October 2017 4 Footnotes: (a) In September 2017
Company History Gross SIGNIFICANTLY INCREASED PRODUCTION GROWTH DRIVEN BY Mcfe/ 109,800 day EXECUTION OF SUCCESSFUL ROLL-UP STRATEGY ‘17 Feb: Floated on AIM raising Gross $50m – largest UK O&G Mcfe/ 26,000 day IPO since April 2014 Gross Apr: Mcfe/ Gross 11,000 ‘16 day Acquired producing wells in Mcfe/ Gross 7,000 day Mcfe/ Ohio and Pennsylvania for 6,000 day $1.75m Founded ‘15 ‘14 ‘10 June: ‘01 Successfully listed Acquired producing wells bond on ISDX from Titan for $72.8m; Entered Ohio Growth Market, which Raised add’l $35m through Acquired producing raised £10.6m secondary offering on AIM wells from AB Acquired producing wells Acquired assets of Resources for Acquired producing wells from Eclipse Resources Diversified September: $14.5m from Broadstreet Energy for $4.8m Resources Inc. for Closed on the remaining for $2.6m $5.2m Acquired producing Acquired producing Acquired producing wells Titan wells held within wells from Deep wells from Operated Acquired producing wells and pipeline assets from public partnership Assets located in Resources, for Equity Investment and equipment from Seneca Resources for structures (incl. 29 Hz West Virginia $5.5m (Fund 1) for $4.3m Texas Keystone for $725k $7.0m wells) for $11.4 million October 2017 5
Proven Success Growing the Asset Base & Production – ~90% CAGR (a) since 2013 Asset Base of Operated, Producing Wells 2013 109,800 Baseline legacy Mcfe/d Fund 1 18,000 120,000 Broadstreet +142% Texas Keyston Eclipse 16,000 Seneca EnerVest 100,000 Titan 30June Titan 30Sept 14,000 Production (Mcfe/d) 12,000 80,000 Mcfe/d Producing Wells 10,000 2017 60,000 8,000 +90% 6,000 40,000 +180% 4,000 20,000 6,000 2,000 +33% Mcfe/d - - 2013 2014 2015 2016 2017 October 2017 6 Footnotes: (a) Calculated for the 4.5 year period from 2013 – June 2017
Strategy ACQUIRE, PRODUCE, DRILL Source: Large energy players looking to reduce operating expenses and re-focus their limited financial & personnel resources on shale Target: Predictable production rates, long-life (50+ years), Target PDP low declines and compelling valuation metrics acquisitions Acquire and manage Focus: On asset attributes & scale vs. location (Geographically agnostic) producing natural gas and oil properties to Repairing, recompleting and reconnecting lines generate cash flows, providing stability and Optimize compression Maximise growth for our Deploying rigorous field management programmes production; stakeholders Minimize Cost Focus on conventional formations Execute low Strict control of drilling and completion costs risk, Increased drilling in higher price environment low cost drilling Increasing dividend o Improving gross margins o Strong free cash flow generation o Decreasing unit OpEx o October 2017 7
Inorganic Growth - Compelling, EBITDA-Accretive Valuations $/flowing gross mcfepd Unique climate % Below Peak Price per Flowing Mcfepd 0.0x $12,000 for value accretive acquisitions -0.2x Peak Industry Shift to Horizontal, Unconventional Development ~2012 Price -1.7x -2.0x Regional reputation as credible purchaser -5.0x $10,000 -5.3x Large energy players streamlining operations -10.0x $8,000 -8.9x -9.1x $ per flowing mcfepd Ideally positioned to assess and execute -12.8x -15.0x $6,000 $10,784 $9,000 -20.0x $4,000 “Bolt - on” “Transformative” ~15% Prod. Incr. ~160%+ Prod. Incr. -25.0x $2,000 $4,059 $3,647 -25.7x $1,721 $1,089 $1,067 $780 $404 -30.0x $- Diversified AB Deep Fund 1 Broadstreet Eclipse Seneca EnerVest Titan Resources Resources LLC 2006 2011 2012 2014 2015 2016 2017 2010 October 2017 8
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