Diversified Energy Share Discussion Threads

[spangle93] 25/5/2022 08:44

Bluemango

While elpirata gets his thoughts together, I'd offer a view as I hold both.

It's simplistic to look at "the oil and gas sector" as one homogeneous group of companies seeking to make shareholders a return through investing capital to develop this natural and necessary resource. It's fair in some senses, for example, the attractiveness of the sector depends on the global price for oil, and the price companies can get for gas in their respective regions

However, in reality, there's a wide span of risk. At one end of the scale are the prospectors - explorers who secure licences in virgin territories and seek to do remote sensing and background work to attract partners to pay for an exploration well. These companies can make investors lots of money if they hit pay, but as seen in EME in the last couple of weeks, it doesn't look pretty when such wells aren't successful.

At the other end of the spectrum, there are companies that have production generating cash flow, and which use this cash to seek to manage the decline of existing assets rather than deliver new ones. They have less downside risk, and many pay dividends, but conversely, they aren't going to go up 4-fold at 8.01am after reporting a discovery.

DEC is at the extreme edge of the spectrum, in that it doesn't drill new wells at all. You could even view it as a type of utility. The fate of one single well has no bearing on the share price when you operate thousands! It hedges the sale of much of its production at prices that more than cover its operational and corporate costs, so the dividend is as secure as could be imagined.

I3E is towards the same end. Two years ago, it became a player in the west Canada sedimentary basin by buying two producers, and has added a third tranche of assets from Cenovus. So like DEC it has grown through acquisition and now has a large land position, and operates many wells that throw off considerable cash at these elevated product prices. Both also operate some infrastructure that provides revenue from third parties.

Where it differs is
1. It says it will pay dividends at 30% of FCF, so these could fall if there is a marked drop in product prices.

2. It pays dividends monthly rather than quarterly, in UKP.

3. Moreover it's listed on TSX as well as AIM, so there's no W8-BEN to complete and no withholding tax. The monthly dividend has just been increased - but it remains lower than DEC.... I think it's around 6% at current prices.

4. Its model is to drill wells in known area when the oil and gas prices are high, and to acquire cheap assets when the oil price is low.

(edit) 5. While DEC is almost exclusively a gas producer, I3E produces roughly 15% oil, 35% NGLs and 50% gas

Finally it has made discoveries in the Central North Sea in the past, and plans to appraise one of these discoveries in Q3, so there is an element of significant upside, should this well prove the field to be larger than currently booked. Either way this well should point to a development route for the discovery.

That's just a brain dump - someone else can tell me what I missed, and what I've overstated.

[cassini] 25/5/2022 02:00

Ex-div tomorrow (26th).

[bluemango] 24/5/2022 22:56

Elpirata, given your interest in DEC, can I ask your views on the ostensibly similar-looking i3e?

[aleman] 24/5/2022 16:59

Trials under way for converting gas and oil fracked wells to geothermal energy or even running side by side with hyrocarbon production.

[pro_s2009] 24/5/2022 11:51

O/T for you dividend lovers, I have just set up a new thread on i3E



The yield is not as high as DEC, yet, but its paid in Sterling, and its paid Monthly and given the way the i3E production and cash generation is exploding - the dividend will be growing more and more. So you get exploding cash generation, rising dividend and thrown in for free is a North Sea appraisal drill coming up in September which could be worth double the current share price.

Share price is being held at the moment due to a large holder taking profits around the 27p level. Broker target price is 49.8p and thats under review for a material upgrade after the last update.

[aleman] 24/5/2022 09:05

Contracts for all timeframes matched or surpassed old highs yesterday.

June 2022


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June 2024


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June 2026


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June 2028


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[11_percent] 23/5/2022 21:47

Hi guys.....quick question.

Can anyone point me to a US natural gas company (producer/seller) which is not hedged, or small hedge......has immediate exposure to US gas price.

Cheers.

[scrwal] 23/5/2022 12:46

The Cenkos report highlights how really cheap the latest acquisition was - hopefully there are more like it in the immediate pipeline.

It also shows the impact of hedging, on the current year especially.

[lab305] 23/5/2022 09:27

That's two tips is as many days.Target price of 181p .

[woodhawk] 23/5/2022 08:51

Many thanks for the link, Pro_S2009, most useful!

[flyer61] 23/5/2022 08:02

At the open just managed to pick 6000 up at 122.61. That is now a decent holding for me.

GLA

[pro_s2009] 23/5/2022 07:55

Download link to the Cenkos report below, PDF file.



.

[simplemilltownboy] 23/5/2022 07:51

Cenkos update this morning target price 1.81 a good write up.

[gary1966] 22/5/2022 09:28

I think we established long ago that any broker connected to a bank will deduct 30% withholding tax, and they insist they can do nothing else, regardless of whether you have completed a W-8BEN or not. Other brokers do respect the W-8BEN and deduct the correct 15% withholding tax. IG and II seem to be the only brokers that don’t charge stamp duty on purchases and IG provide DMA which is very useful.

Please refer to the header as it is all up there.

[fred177] 21/5/2022 21:47

I am moving my portfolio to halifax but may move DEC to IG after as a one off I don’t trade very often tend to buy and hold for dividends have a SSAS WITH AJ BELL also very good thanks for all your posts much appreciated

[tonytyke2] 21/5/2022 20:18

But they do! Fixed low cost fees, not percentage driven high cost fees. Will check what happens with taxation situation when the dividend is paid. A J Bell do the administration.

[tonytyke2] 21/5/2022 18:36

Conversely, Halifax have cracking low cost fixed fees for SIPP' s.

[rogerramjett] 21/5/2022 16:26

I have an HL account and W-8BEN is completed on line. Wanted to buy some more DEC in wife's Halifax account but it's a disaster. Halifax are the worst. IG account is good platform but my account is small and trade infrequent..they charge something like £24 per quarter for it being dormant. Will move this to HL account and consolidate

[mrnumpty] 21/5/2022 11:41

Fred177 . I’ve just looked here for the first time . With regard to Barclays , I agree : maybe fifteen years ago , I bought shares in three tranches via Barclays Stockbrokers in a British-Australian dual-listed company . For no reason whatsoever ( I am English / British , with an English accent and , apart from some acquaintances , I have never had any contact with Australia and , furthermore , I had used Barclays Stockbrokers many times up to that point ) , Barclays sold me the Australian version of the shares and , when I contacted Barclays , they just didn’t want to know , saying I should set up an account with an Australian stockbroker . Due to the utter indifference of Barclays , i was never able to sell the shares . I left Barclays Stockbrokers , never to return , and I gave since then used another broker .

[fred177] 20/5/2022 19:13

Thanks Woodhawk ive got an IG account so will probably move DEC there

[time 2 retire] 20/5/2022 15:09

I messed up there then, my own fault for not doing any research, I just looked for high dividend yields and Dec came up near top and x divi next week!
I'm only in here until (if) evraz comes back online.
Cheers.

[woodhawk] 20/5/2022 14:44

fred177,

I've never had any serious problems with IG Index - divis used to be paid slowly but vastly improved now, usually same day. Been using them for years. Only £3 per trade if u do more than 3 trades per month. No platform fees unless you do less than 3 trades per quarter. I have ISA, SIPP and regular sharedealing accounts with them. You can do W-8BEN all on line in a few seconds.

[fred177] 20/5/2022 14:34

I've been onto them about it they said there was nothing they could do, ive just emailed their CEO