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Diversified Gas & Oil Enters Gulf Coast: A New Chapter Of Acquisitive Growth


  • Diversified Gas & Oil finally announced the long-anticipated entry into a new regional focus area - the Gulf Coast.
  • In this article, I review the Cotton Valley play, analyze the transaction metrics, review the immediate and long-term impact of the deal, and update the investment thesis.
  • I believe Diversified offers a more attractive risk-reward profile at the present time than ever before.
  • I do much more than just articles at The Natural Resources Hub: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Silhouettes of Pumpjacks and Oil Workers
Photo by ronniechua/iStock via Getty Images

The management of Diversified Gas & Oil Plc (DGOC.LSE)(DGOCF) said during the 2020 earnings call in March 2021,

"We will be acquiring assets this year. We're just making sure that the ones that we

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This article was written by

Laurentian Research profile picture

As a natural resources industry expert with years of successful investing experience, I conduct in-depth research to generate alpha-rich, low-risk ideas for members of The Natural Resources Hub (TNRH). I focus on identifying high-quality deep values in the natural resources sector and undervalued wide-moat businesses. This investment approach has proven to be extremely rewarding over the years.

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Analyst’s Disclosure: I am/we are long DGOCF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (20)

hi there i'm an italian investor who invest in an English company that works in Usa...so i'm not sure what's the total withholding i have to pay. can someone help me please?
Laurentian Research profile picture
Acquisition of Blackbeard Operating, LLC for US$180 million

alsobirdman profile picture
@Laurentian Research market doesn't seem to like this news. Have to decide what the impact of the dilution will be
Laurentian Research profile picture
@alsobirdman The market is drunken when it comes to Diversified. Not going to take any advice from Mr. Market. It's an opportunity IMO.
alsobirdman profile picture
@Laurentian Research I had just bought more early in the week. A few days early, but now considering adding more. I already have a stink bid sitting there and would be very happy to see it trigger.
Laurentian Research profile picture

Diversified Energy Company confirms completion of Cotton Valley deal
Laurentian Research profile picture
Diversified Gas & Oil Plc Announces New Corporate Name to "Diversified Energy Company PLC."


The name change was approved by shareholders at the company’s AGM on April 27.
Excellent, easily understood research report on probably the best managed energy company globally
Laurentian Research profile picture
Thanks for sharing your take. GLTAL!
Laurentian Research profile picture
"All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident." - Arthur Schopenhauer

It is called contrarian investing that you buy a stock, when nobody seems to know anything about it, and anybody who comes across it tries to find a reason to dislike it.

It is also called contrarian investing that you sell a stock, when everybody has come around and loves the stock, and think those who don't buy it are idiots.
I note that your marked area of interest for them excludes the Permian basin. I know that the interest area is a gas trove. Smart- boring is good.
Laurentian Research profile picture
Please also note: by calling it the CENTRAL regional focus area (RFA), they leave room for a southern RFA, which I suppose to be the Eagle Ford play or even shallow shelf Gulf of Mexico.

Once the dust has settled in the Permian Basin, say, in 10 years, they can go there and call it the western RFA.

This thing has so much more headroom than people think.
@Laurentian Research I agree. I wish that I had more free $ to increase my stake but, life directs other expenses... Hopefully they don't move too quickly on me.
jonjung profile picture
Thanks for your continuing research reports on Diversified. We have owned the stock for a year or so and the strategy appears to be working great.....and management owns a big piece of the company. They need to get the shares listed in the US to remove the 30% tax withholding. You can recover the foreign tax in taxable accts but in IRA's and Roth's its probably not recoverable. The new region is a great move and they will be able to add substantial new wells as they establish a reputation in the basins. US based analysts will only start following the company when they get a US listing. Even then Diversified is a different type of oil/gas company and doesn't drill wells to build their production. What other US based public company follows a similar strategy? If they are successful in implementing their SAM program to improve margins, this will be a terrific long-term investment. Look forward to future reports. Good work.
Laurentian Research profile picture
@jonjung Thanks for sharing your take. GLTALs!
@jonjung I communicated with Wren from dgocf IR. He instructed that the 30% withholding should not be applied to US citizens and that the brokerage should not be doing so. He wrote that they should be able to tell by our tax id/ss#. I just saw his email so I'll have to contact my broker on Monday to fix this. I'll try to let you know how that goes.
Laurentian Research profile picture
Dear Reader,

Thank you for reading and commenting.

"In investing, you gotta see the forest through the trees." - Anonymous
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