US firm in biggest London oil and gas flotation since 2014
Diversified Gas & Oil, a conventional gas producer in the United States, is set to list on London's junior AIM market on Friday and raise $50m (€46m), the biggest oil and gas flotation since oil prices started to fall in mid-2014.
Diversified, which produces 4,700 barrels of oil equivalent per day mainly in the US states of Ohio and Pennsylvania, said it will pay shareholders 40pc of operating cashflow as dividend by June 30.
The flotation, bringing the company's market capitalisation to $86.4m (€80m), will be the largest London oil and gas IPO since the listing of Savannah Petroleum in August 2014, which also raised $50m.
Since then, London listings in the sector have been small deals as a dip in oil prices dried up investor interest in niche oil and gas companies.
Savannah, a Nigeria-focused oil explorer, has lost 53pc of its stock market value since its listing.
Diversified will place each share at a price of 65 pence.
Mirabaud Securities, which acts as broker for Diversified, said the company was well-placed to continue buying low-cost conventional gas acreage in the US as larger companies focus on unconventional shale gas assets and sell off traditional assets.
"When the commodity cycle turns, infill wells can be drilled quickly and cheaply and have a high probability of success," Mirabaud said.
Diversified, which was founded in 2001 by Rusty Hutson, who remains its ceo, said its average operating costs were around $9.5 per barrel of oil equivalent.
Diversified said it had chosen to list in London because the United States has no comparable junior market. (Reuters)