D I V E R S I F I E D G A S & O I L P L C INVESTO R PRESENTAT IO N J A N U A R Y 2 0 1 8 CO NF IDENT IAL
January 2018 Investor Presentation 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. 1
January 2018 Investor Presentation MARKETING PURPOSE Acquire Two Transformative Packages for $180M* in Cash Target : “Mountaineer”** - $85M Target: Alliance Petroleum Corporation - $95M $180M Equity Capital Raise Progresses Stated Strategy Enhances per share Geographic Concentration Drives Further Positions DGOC Efficiency as Consolidator Cash Flow & Dividend Footnotes: * Net of expenses ** “Mountaineer” is a code name 2
INT RO DUCT ION TO DG O C Our Current Business 3
January 2018 Investor Presentation CORPORATE OVERVIEW: DIVERSIFIED GAS & OIL PLC APPALACHIAN BASIN GAS AND OIL PRODUCER Corporate Profile Today AIM Exchange Listing Details DGOC DGOC Focus Area Net Daily Production MBoe per Day 10.3 Net PDP Reserves (a) MMboe 54.6 #M Ordinary Shares in issue 145.1 GBp/share 88.50 Share Price (18 Jan 2018) Market Capitalisation (b) US$M $178 Net debt (a) US$M $58 Enterprise Value (b)(c) US$M $236 Regional Profile – Appalachian Basin Established Oldest hydrocarbon producing region in the US Sustainable Long reserve life (~40 to 50+ years per well) with low plugging costs (~$10k/well) Productive Basin produces ~24 Bcf/d Natural Gas with >1 million wells drilled (high success rate) Active Abundant infrastructure that continues to attract new investment with conventional & horizontal development Predictable Geologically prolific, long-life shale rock in Marcellus/Utica and conventional reservoirs Stable Basin located within the continental United States with a stable and industry-friendly political environment Growing Conducive environment; DGO ~80% Production CAGR since 2012; Significant pending acquisitions ($180M) Footnotes: (a) Estimated as of December 31, 2017; (b) As of 18 January 2018 based on a closing price of 88.50 GBp; (c) Assumes a USD:GBP exchange rate of $1.38 4
January 2018 Investor Presentation COMPANY HISTORY MARKED BY GROWTH Gross Boe/ 18,000 day ~80% Gross ‘17 Production CAGR from 2012 to Jun17 Feb: Floated on AIM raising $50m – largest UK O&G Gross IPO since April 2014 Boe/ 4,333 day Apr: Gross Acquired producing wells in Boe/ Gross Ohio and Pennsylvania for 1,833 ‘16 day Boe/ Gross $1.75m 1,167 day Boe/ 1,000 day June: Founded ‘15 Acquired producing wells ‘14 ‘10 from Titan for $72.8m; ‘01 Raised add’l $35m through Successfully listed bond on ISDX secondary offering on AIM Entered Ohio Growth Market, which September: Acquired producing raised £10.6m Closed on the remaining wells from AB Acquired producing wells Acquired assets of Titan wells held within Resources for Acquired producing wells from Eclipse Resources Diversified public partnership $14.5m from Broadstreet Energy for $4.8m Resources Inc. for structures (incl. 29 Hz for $2.6m $5.2m Acquired producing Acquired producing Acquired producing wells wells) for $11.4m wells from Deep wells from Operated Acquired producing wells and pipeline assets from December: Assets located in Resources, for Equity Investment and equipment from Seneca Resources for Acquired producing wells West Virginia $5.5m (Fund 1) for $4.3m Texas Keystone for $725k $7.0m from NGO for $3.1m 5
January 2018 Investor Presentation A UNIQUE OPPORTUNITY; ACHIEVING SCALE THROUGH ACQUISITIONS Established, Profitable & Growing • Founded in 2001 by the CEO with ~ 80% CAGR of production since 2012 • Over 10,300 net barrels of oil equivalent (“Boe”) production per day (a) • 54.6 million Boe Proved-Developed-Producing reserves (significant, unrecorded PUD & 2P potential) (b) Differentiated • Low political and operational risk; 100% US onshore operations with stable, long-life production • Low operating costs & maintenance capex; Averaging $7.46/Boe ($1.24/Mcfe) for the past six months (c) • Cash-flow positive; +40% Adjusted EBITDA margins (c) Proven Dividend Model • Target dividend of ~40% of free cash flow (Paid $0.0398/share in 2017) • Increasing Yield: 5.7% estimated yield on 2018 Dividends (before acquisitions) (d) ; 4.3% yield on 2017 Dividends (e) • More than 75% above the average yield of the two other UK Listed independent E&Ps paying a regular dividend (d) Value Creating • Deep relationships in the industry support consistent and accretive deal execution • History of success completing acquisitions ; ~$135 million of transactions completed; $180 million expected in 1Q18 • Operational excellence & Strong balance sheet / liquidity position ; Low unit OpEx cost; $50 million of liquidity (f) Footnotes: (a) Net daily production rate is based on Dec17 “exit rate”; (b)Estimated as of 31 December 2017; (c) For the mont hs June - November 2017; (d) Source: Bloomberg as of 18 Jan 2018; Peers include SEPL & SIA; Estimated yield excludes impact of acquiring the two target acquisitions discussed within this presentation; (e) Assumes an average share price of $0.70 and $0.0399 total dividends; (f) At 31 December 2017 inclusive of $15 million cash + $35 available on credit facility. 6
January 2018 Investor Presentation OUR BUSINESS MODEL Value Balanced ~6% 2018E Dividend Yield (a) 6.0% • Disciplined pursuit of cash producing • Finance acquisitions with a proper 36% Equity Return assets available at low multiples balance of debt and equity to maintain since IPO (b) a strong balance sheet 5.0% Peer Average Yield: 3.3% Stable Efficient 4.0% • Maintain a strong balance sheet and • Maintain efficient cost structure by low leverage at reduced commodity spending only what is necessary 3.0% 5.7% prices 2.0% 3.8% Consistent Returns 2.7% 1.0% • Manage producing wells to maintain • Return meaningful cash to shallow declines and maximize shareholders through the dividend economic recoverable reserves 0.0% DGOC Peer 1 Peer 2 Footnote: (a) Source: Bloomberg as of 18 Jan 2018; Peers include SEPL & SIA; (b) From IPO on 3 Feb 2017 (£0.65) to 18 Jan 2018 (£0.885) 7
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