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27 Jan 2021 | 07:04

Diversified Gas & Oil results in line on record production

(Sharecast News) - Diversified Gas & Oil said 2020 results were in line with expectations after the company achieved record production and cut costs.

Annual production rose 18% to an average of 100 thousand barrels of oil equivalents a day (Mboepd) in the year to the end of December from a year earlier. Operating cash costs fell 15% to $5.58 per barrel of oil equivalent.

Daily production from legacy assets dipped to about 69 Mboepd from 70 Mboepd as better management helped offset natural declines.

The FTSE 250 company said it had cash flow and dividend stability with about 90% of 2021 natural gas hedged at a weighted average floor price of $2.66 per million British thermal units.

DGO said a better outlook for gas prices was helpful as it adds extra hedge protection for future years.

The company said President Biden's order to ban new drilling on federal lands would have little impact because less than 1% of its acreage is on federal property and the order does not affect existing properties. No development on federal lands could increase commodity prices, DGO added.

Rusty Hutson, DGO's chief executive, said: "The unprecedented events of 2020 have underscored the inherent resilience of our business model. We've built our business to operate in any natural gas price environment and the strength of that model was evident throughout the significant volatility of 2020.

"With a strong balance sheet, efficient cost structure, improved commodity price outlook, strong hedge protection and a robust outlook of potential accretive growth, we are poised for another exceptional year."

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