In an investor presentation in January, Diversified Gas & Oil Plc. (DGO) gave its acquisition targets the code names “007” and “Mountaineer”—adding a touch of intrigue to the $180 million it’s staking in the Appalachian Basin.

In mid-February, the company said it entered an agreement to buy its “007” target, Alliance Petroleum, a subsidiary of Lake Fork Resources Acquisition, for $95 million. The deal includes $70 million cash and the assumption of $25 million of debt. The deal will add 13,000 producing, operated wells in Pennsylvania, West Virginia and Ohio, according to DGO, which is traded on the London Stock Exchange (AIM) and has a head office in Birmingham, Ala.

In a second February deal, DGO said it acquired 11,000 producing, operated wells—its “Mountaineer” target—from CNX Resources Corp. (NYSE: CNX) for $85 million.

The transactions, both of which DGO expects to close in March, will increase the company’s HBP position to about 4 million acres, a 147% increase from its 1.6 million-acre legacy assets.

“Both Alliance Petroleum and CNX Resources’ Appalachian assets provide a broad base of producing wells that complement our existing portfolio of assets and would significantly increase our net production, related cash flows and allow us to progress our dividend to shareholders,” said Rusty Hutson Jr., DGO’s CEO and founder. “These proposed acquisitions advance our clearly defined strategy of gaining scale within the Appalachian Basin by acquiring assets that allow us to realize operating efficiencies, enhancing our operating margins.”

Alliance and CNX’s assets geographically intertwine with DGO’s footprint in Ohio, Pennsylvania and West Virginia. More than 90% of the assets are within a 125-mile radius from the center of the region.

Hutson, whose family has been involved in oil and gas for four generations, founded DGO in 2001 after a career in finance and accounting. He said DGO has a longstanding commitment to job creation in the Appalachian Basin, which will continue with the expansion of the company in the region.

“We continue to evaluate similar acquisition opportunities in the basin, targeting mature producing wells that allow us to return cash to shareholders through a regular dividend,” he said.

The acquisitions will add 17,000 barrels of oil equivalent per day (boe/d), increasing the company’s total net daily production by nearly 175% to 28,000 boe/d, DGO said.

The company’s total proved developed producing reserves will also more than double to 173 MMboe from 55 MMboe.

DGO said it will pay for the acquisition with proceeds from a stock offering that raised $189 million in net proceeds. The company received a $500 million, five-year revolving credit facility led by Key Bank NA, it said Feb. 20. After the Alliance and CNX transactions close, the company will initially have access to $200 million.

The company said it will pay about $14.9 million for related acquisition costs and to fund additional working capital.

In 2017, DGO completed three acquisitions, including the acquisition of Titan Energy LLC’s assets. In May 2017, Titan said it would sell the assets for $84.2 million.

Darren Barbee can be reached at