The discovery of the potential of shale formations in the mid-2000s led to a dramatic change in US onshore oil and gas production. The large producers shifted their attention to shale drilling and fracking.
As a result, many of the older, typically conventional wells were left neglected. Often deemed to be unproductive or low-reward, larger corporations began to consider them non-core assets to be divested to generate cash flow for their ongoing development programs. Enter DGO. Initially started as a business in 2001 by former banker Rusty Hutson, he saw the opportunity to buy these unwanted assets and nurture them. Their production capacity was mature and predictable - what DGO could provide was careful husbandry to get these wells either back into production or to fix them up to enhance their long life.
To take advantage of this opportunity, DGO needed capital to buy such assets. In the mid-2010s it was still a small enterprise and, in the US, an oil and gas company focused on anything but shale was of little or no interest. For a variety of reasons, Hutson was not attracted to the private equity model.
After a UK bond issuance had enabled DGO to bulk itself up with a couple of small acquisitions, he was introduced to AIM. Its potential as a market for growth companies was evident. DGO’s IPO took place in February 2017. “We felt our story was unique to London,” says Hutson. “There were already several pure exploration companies listed in London but we were focused on onshore US production and we were going to pay a dividend. These elements gave comfort for institutional investors.”