Diversified Energy Share Discussion Threads

[podgyted] 03/5/2022 12:42

"US natural gas futures extended gains above $7.8 per million British thermal units, close to an over thirteen-year high of $8.197 hit on April 18th, amid concerns that an early start to the cooling season could boost demand in May. Weekly natural gas inventory injections are usually highest when demand for heating/cooling is lowest, which is during Spring and Fall. However, late-season wintry weather in April caused the gap between current storage levels and the 5-year average to widen to roughly 17%, and forecasts of hot weather in May may crippled utilities’ efforts to increase stocks ahead of next winter. At the same time, output continued to face volatility amid the ongoing maintenance season. Elsewhere, efforts by the EU to wean off Russian supplies have been keeping American export facilities running at near full capacity."

[lab305] 03/5/2022 11:42

NATURAL GAS
7.781 +0.306 +4.09%

[thequestors] 03/5/2022 10:05

ASP5, interesting thought on circa $2.3Bn acquisitions - it is along the lines of my own general thinking that it is undervalued. However do you know whether the $2.3Bn price cited was the cumulative acquisition price or the value that the company now places on them? The company is sometimes criticised for marking up the value post acquisition, also the later acquisitions would need to be net of Oaktree's contributions. Second thought, the comparison would need to be against enterprise value (£1.86Bn) not market cap as debt would need to be considered. Just interested if you or anyone has done a more detailed analysis. I have no doubt that the market price for these acquisitions has skyrocketed in the interim years.

[aleman] 03/5/2022 07:59

May 2024 Contract


free stock charts from uk.advfn.com

[asp5] 03/5/2022 06:34

With the demand picture laid out in the video plus the dividend secured and debt amortized by 2030, any downside risk should be limited.

Looking at the upside the recent $50M acquisition to increase EDITDA by ~$35M just underlines DEC's ability to execute. If you look at p31 of the 2021 results presentation, it was estimated it would take ~$94M to replace ~$31M in lost EDITDA due to the decline rate. DEC have done this at half the estimated cost - meaning an additional $45M to invest in the business.

[carcosa] 03/5/2022 05:43

With reference to the shipments/prices this background piece by Wall Street Journal may be of interest:

[podgyted] 02/5/2022 20:39

Thing is, if in a market crash DEC falls 50% then it will be yielding 20% with little reason to envisage the dividend is at risk. Can't see that happening.

Plus, Natural Gas is up @ 4% at the moment - cheap gas has ended in NA - its being shipped to Europe. There is a structural change.

[asp5] 02/5/2022 11:28

Hi cassini - its a fair point but I do take comfort from early 2020 when the market crashed and DEC went from ~1,05 to ~60 but recovered to ~1,08 within a couple of months.

While you cannot rule anything out, I agree downside risk is limited especially given the safety around the current yield. However upside is considerable as I have outlined. I like this sort of profile in my stocks.......

[cassini] 01/5/2022 21:50

asp5,

I'm optimistic for DEC, but I also believe it'll get blown around in price if the market tanks, like most other shares.

It might for instance get sold to raise money for holders with margin calls elsewhere, etc.

It's a hold for me though. The hedging policy that produces a lacklustre performance in a rising gas price environment ought to damp down any downside volatility too.

Plus, my effective dividend yield here is about 12.5%!

[asp5] 01/5/2022 21:18

Cassini - on slide 26 of the 2021 final results presentation, DEC highlighted that 20 acquisitions totalling ~$2,3B have been made since IPO in 2017. These acquisitions were accretive and executed at good price points - in other words DEC did not overpay for these assets.

However, the current share price puts DEC market cap at ~$1,25B (a near 50% discount on NAV as it were). It would take a share price of ~2,15 GBP (at current exchange rates) to value DEC at the level of assets purchased since IPO.

I see significant potential for steady share price appreciation over the short to medium term especially given the recent announcements, fine tuning of the business model and progress management has made on execution.

[cassini] 01/5/2022 13:54

We seem to be following a nice uptrending price channel.

Looks like 125p possible shortly.

That's notwithstanding what might happen on Monday after the 1000 point fall in the DOW on Friday. The LSE will be closed though so we'll be spectators.

[owenski] 01/5/2022 11:01

Greta, lol, lots of people tried to spoil my childhood, but I didn't get mad, I grew up and bought a car - a big one. ;-)

[asp5] 01/5/2022 11:01

podgyted - DEC provided a trading update on 9th Feb and of course the 2021 year end results were published on 22nd March with an investor webcast given on 31st March where the final results and an update on current business was provided. I am not expecting anything until later in the year.

[1knocker] 01/5/2022 10:31

I think the sainted Greta must be follower of this board. I have been scratching my head as to who the perpetual downticker might be. Greta seems a shoe in for that role. Can't think who else would be other than delighted with the way DEC is going at present.

[podgyted] 30/4/2022 14:22

Aren't we due a Q1 update?

I was expecting it on the same day as the AGM - have I missed something?

[my retirement fund] 28/4/2022 12:38

Yes me too, next ex dividend date not to far away either

[flyer61] 28/4/2022 12:24

Pleased with the price action here...have topped up.

[woodhawk] 28/4/2022 12:08

With even zero capital appreciation, at 11% you would double your investment in 6.5 years if reinvesting. That alone will do me. Alternatively at 2% in the bank, it would take 36 years and would almost certainly have been entirely eroded by inflation.

[1knocker] 28/4/2022 12:03

I feel very happy with that. Doing well, and committed to continuation of the approach which attracted me to buy shares in this company. All good.

[asp5] 28/4/2022 11:40

just checked the 2021 results call ( )

re the US listing - this is what rusty said

"We also are looking hard at the U.S. markets and the potential for an ADR, do the listing, that will be a tremendous focus for us as we go through 2022."

So no target date specified as I mistakingly metnioned in my previous post, but certainly a work in progress.

While looking up the above, the following quote from Rusty caught my eye:

"And let me be very clear about the dividend. Under no circumstances is our dividend ever in jeopardy, we will never cut our dividend. We will always grow our dividend. As we grow, do acquisition, we'll always grow our dividend. That's part of our plan at the way we return. Cash to our shareholders, we told them we would, and we will continue to do that. We feel that 11% dividend yields are pretty hefty dividend yield and so we can use excess cash to acquire assets. We can use excess cash to buy back stock, if necessary. We can do a lot of things with that cash, but the dividends will always be a crucial part of the business and we'll continue to grow it as we grow the business."

This helps to clarify the 40% or 30% FCF assumption from the analysts. Reading between the lines DEC will grow the dividend but if yields continue above 11+% will moderate that growth (so FCF % may reduce) however if / when share price appreciates the 40% FCF target is still in play. Seems a perfectly sensible way to go and again hints at share price appreciation potentially using excess cash for share buy backs at these low levels.

Have to say I missed this when listening first time around.....

[sunbed44] 27/4/2022 19:31

The pound is down again whens the next ex div date LOL

[lab305] 27/4/2022 12:51

Maybe too small to warrant one.

[11_percent] 27/4/2022 12:48

Bit disappointed we do have a new presentation telling us about the acquisition.

[11_percent] 27/4/2022 12:47

It will be good if DEC have plans to list in the US this year......but I thought that Rusty said he would list when the market cap got $2billion....or was it £s.

[asp5] 27/4/2022 12:28

Farrugia - DEC are planning a US listing around mid year if memory serves. This hopefully will create additional demand for the shares...