Diversified Gas & Oil Adds to Conventional Assets in KY, VA, WV

UPDATE: A source has shared with us who is doing the selling–see our note below.

Diversified Gas & Oil, founded in 2001, is an operator of oil and gas wells (and pipelines). According to the Diversified website, the company’s “innovative, disciplined investment strategy is focused on the acquisition of mature, low-decline and low-risk wells, enhancement of operations with a focus on efficiency, and maximization of profitability for shareholders.” Diversified issued a press release last week to say it has signed a letter of intent to purchase 2.5 million acres of leases, and 11,350 wells, in Appalachia–for $575 million. The acreage and wells are located in Kentucky, Virginia and West Virginia. Although the press release doesn’t say, the wells are almost certainly all conventional wells (no shale wells). We were not able to determine if any of the acreage includes rights to drill shale wells. Given the company’s focus on “low-decline and low-risk wells,” we have to conclude they target only conventional wells, since shale wells are high decline and moderate to high risk (sink a shale well in the wrong place and you just blew $7-8 million). Diversified recently closed on deals to pick up acreage and wells from both Alliance Petroleum Corporation and CNX Resources. Who’s the seller this time? We have a guess about who it may be…

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