Diversified Gas & Oil : Related Party Transaction and Notice of AGM

RNS Number : 2859H

Diversified Gas & Oil PLC

23 March 2020

23 March 2020

DIVERSIFIED GAS & OIL PLC ("DGO" or the "Company")

Related Party Transaction

Posting of Annual Report and Accounts and AGM Resolutions

Diversified Gas & Oil PLC (AIM: DGOC), the U.S. based owner and operator of natural gas, natural gas liquids and oil wells as well as midstream assets, has become aware of an administrative oversight leading to non-compliance with certain provisions of the Companies Act 2006 (the "Act") whereby it did not file unaudited interim accounts at Companies House as required by the Act prior to making certain distributions to shareholders in 2017, 2018 and 2019. The total aggregate value of the distributions approximated £94.5 million (the "Relevant Distributions"). Importantly, the Company's ability to pay future dividends are entirely unaffected by this matter, and upon learning of the matter, the relevant unaudited interim accounts were promptly filed at Companies House.

The Company also announces that it has today posted its annual report and accounts for the year ended31 December 2019 (the "Annual Report") and notice of the annual general meeting (the "AGM") of shareholders (the "Notice"). The resolutions to be put to the AGM include a resolution to address matters arising in relation to the Relevant Distributions, which comprise a Related Party Transaction, details of which are set out below.

The Notice convenes the annual general meeting for 9:00 a.m. on 15 April 2020 at Buchanan Communications Limited, 107 Cheapside, London EC2V 6DN.

Related Party Transaction

With respect to the Relevant Distributions, DGO had sufficient distributable reserves though it inadvertently did not file its unaudited interim accounts to Companies House confirming that the Company had the requisite level of distributable profits as required under the Act. Consequently, the Relevant Distributions were paid in technical infringement of the Act, though neither the amount or payment of the Relevant Distributions, nor the Company's prior audited accounts were affected, and there is no impact on the Company's financial position either at the time of payment or now.

As a consequence of the payment of these Relevant Distributions, the Company may have claims against past and present shareholders who were recipients of the Relevant Distributions and against past and present Directors (other than Sandra Stash and Melanie Little, who were appointed after the payment of the Relevant Distributions) in respect of the payments of the Relevant Distributions.

The Company has no intention to make any such claims against past and/or present shareholders or Directors in respect of the Relevant Distributions.

To resolve this matter, the Company is entering into a deed of release in favour of all shareholders who have received the Relevant Distributions from any and all claims which the Company has or may have in respect of the payment of the Relevant Distributions (the "Shareholders' Deed of Release") and a deed of release in favour of all persons who were Directors at the time of payment of the Relevant Distributions, by which the Company has waived any rights to make claims against such Directors and former Directors in respect of the Relevant Distributions (the "Directors' Deed of Release" and together, the "Deeds of Release") to ensure that the Company will be unable to make any future claims against its past and present shareholders who were recipients of the Relevant Distributions or against those Directors at the time that the Relevant Distributions were made.

The Directors (except for Sandra Stash and Melanie Little as discussed below) and Sand Grove Capital Management LLP are considered to be related parties under the AIM Rules for Companies (the "AIM Rules"), and entering into the Deeds of Release constitute related party transactions under the AIM Rules.

Sandra Stash and Melanie Little who joined DGO's Board after the payment of the Relevant Distributionsare Independent Directors in relation to this matter and, having consulted with Cenkos Securities plc the Company's nominated adviser, confirm that the terms of the Deeds of Release are fair and reasonable insofar as the Company's shareholders are concerned.

Annual Report and Circular relating to the Company's Annual Meeting

The Annual Report and the Notice have been uploaded to the Company's website at www.dgoc.com. The resolutions to be proposed at the AGM are in relation to the following:

• Reports and accounts. The Company's annual report and financial statements (including the accounts and the reports of the Directors and the auditor of the Company) for the financial year ended 31 December 2019 be received.
• Final dividend. The Company declare a final dividend of 3.50 cents per ordinary share of the Company for the year ended 31 December 2019 payable on 26 June 2020 to the shareholders whose names appear on the Company's register of members at the close of business on 29 May 2020.

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• Appointment of Auditor. PricewaterhouseCoopers, LLP be appointed as auditor of the Company until the next annual general meeting.
• Auditor's Remuneration. The Directors be authorised to determine the remuneration of the auditor to the Company.
• Re-electionof Directors. The following Directors be re-elected:

o David Edward Johnson

o Robert "Rusty" Russell Hutson, Jr.

o Bradley Grafton Gray

o Martin Keith Thomas

o David Jackson Turner, Jr.

o Sandra Mary Stash

o Melanie Anne Little

• Authority to allot shares. The Directors be generally and unconditionally authorised under section 551 of the Act to exercise all powers of the Company to allot equity securities (within the meaning of section 560 of the Act) and to grant rights to subscribe for, or to convert any security into, shares in the Company, as more fully described in the resolution.
• Directors' Remuneration Report. The Directors' remuneration report (excluding the Directors' remuneration policy) as set out in the Company's annual report and accounts for the financial year ended 31 December 2019 be approved.
• Directors' Remuneration Policies. The Directors' remuneration policy, as set out in the Company's annual report and accounts, which takes effect immediately after the end of the annual general meeting, be approved. Additionally, the Company's articles of association shall be updated to increase the limit on the aggregate remuneration (by way of fee) of all the Directors (other than Directors appointed to an executive office or alternate Directors) to account for the additional non-executive Directors who have joined the Board and any additional Directors who may join the Board in the future as well as additional committee work and required time commitments.
• Political Donations and Political Expenditures. The Company and every other company which is now or may become a subsidiary of the Company be authorised to make political donations and incur political expenditure for the period from the date of the AGM to the conclusion of the next annual general meeting up to a maximum aggregate amount of £100,000.
• Electronic communication. The Company be authorised, subject to and in accordance with the provisions of the Act, to send, convey or supply all types of notices, documents or information to shareholders by electronic means, including making such notices, documents or information available on a website.
• Authority to Dis-apply Pre-emptionRights. Subject to the passing of the share allotment resolution, the Directors be generally and unconditionally empowered to exercise all the powers of the Company to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authorisation conferred by the authority to allot shares resolution and/or to sell ordinary shares held by the Company as treasury shares for cash, in each case, as if section 561 of the Act did not apply to the allotment, as more specifically described in the resolution and subject to certain limitations set forth in the resolution. Such authority shall expire (unless previously revoked by the Company) at the conclusion of the next annual general meeting of the Company in 2021 or 30 June 2021, whichever is earlier, save that in each case, the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted (or treasury shares to be sold) after the authority expires and the Directors may allot equity securities (or sell treasury shares) in pursuance of any such offer or agreement as if this authority had not expired.
• Authority to dis-applypre-emption rights for acquisitions and other capital investment . Subject to the passing of the share allotment resolution, the Directors be generally and unconditionally empowered in addition to any authority granted under the authority to dis-apply pre-emptionrights resolution to exercise all the powers of the Company to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authorisation conferred by the share allotment resolution and/or to sell ordinary shares held by the Company as treasury shares for cash, in each case, as if section 561 of the Act did not apply to the allotment, provided that this power shall be limited to certain matters set forth in the resolution. Such authority shall expire (unless previously revoked by the Company) at the conclusion of the next annual general meeting of the Company in 2021 or 30 June 2021, whichever is earlier, save that in each case, the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted (or treasury shares to be sold) after the authority expires and the Directors may allot equity securities (or sell treasury shares) in pursuance of any such offer or agreement as if this authority had not expired.
• Purchase of own shares. The Company be generally and unconditionally authorised pursuant to section 701 of the Act to make market purchases (within the meaning of section 693(4) of the Act) of any its shares on such terms and in such manner as the Directors shall from time to time determine, provided that such power be limited to a maximum number of shares with an aggregate nominal value of up to £642,805.00 (amounting to 64,280,500 Shares as at the date of the Notice) representing 10 per cent. of the current issued share capital of the Company. The Company shall not be authorised to pay less (exclusive of expenses) for each share than the nominal value of such share and the maximum price which may be paid for a share (exclusive of expenses) is the higher of (a) five per cent. over the average market value of the shares for the five Business Days immediately preceding the date on which the Company agrees to buy the shares concerned, based on the share price published in the Daily Official List of the London Stock Exchange plc, and (b) an amount equal to the

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higher of the price of the last independent trade and the highest current independent purchase bid at the time on the trading venue where the purchase is carried out. Such authority shall expire at the conclusion of the next annual general meeting of the Company in 2021.

• Authorisation of the appropriation of the Company's distributable profits and the deeds of release . The authorisation of the appropriation of the historic profits of the Company to the Relevant Distributions concerned and the related Deeds of Release, as more fully described above, be approved.
• Notice of general meetings, other than annual general meetings . As permitted by section 307A of the Act, a general meeting of the Company, other than an annual general meeting, may be called on not less than 14 clear days' notice.

For details of the full resolutions and the accompanying explanatory notes, please see the full Notice available on Company's website at www.dgoc.com.

Enquiries:
Diversified Gas & Oil PLC	+ 1 [phone]
Rusty Hutson Jr., Chief Executive Officer
Brad Gray, Chief Operating Officer & Finance Director
Eric Williams, Chief Financial Officer
Teresa Odom, Vice President, Investor Relations
www.dgoc.com
[e-mail]
Cenkos Securities plc	[phone]
(Nominated Adviser)
Russell Cook
Katy Birkin
Ben Jeynes
Mirabaud Securities Limited	[phone]
(Joint Broker)
Peter Krens
Edward Haig-Thomas
Stifel Nicolaus Europe Limited	[phone]
(Joint Broker)
Callum Stewart
Jason Grossman
Nicholas Rhodes
Ashton Clanfield
Buchanan	[phone]
(Financial Public Relations)
Ben Romney
Chris Judd
Kelsey Traynor
James Husband
[e-mail]

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