Diversified Energy Share Discussion Threads

[aleman] 08/6/2022 15:07

That's a bit higher than I would have guessed but still means 10% can be sold at the recent much higher prices.

As an aside, shouldn't much higher prices allow them to up pumping rates a little? This has not been discussed.

[flyer61] 08/6/2022 15:02

Ale man I believe the hedged amount is circa 90 per cent.

[aleman] 08/6/2022 14:48

Gary1966 - Thanks. Most Henry Hub medium to long prices were $4 to $5 last week(summer to winter) after having risen steeply. I think the discount for Appalachia was around 50 cents (much less for Central) so to close out at an average rate of $3.91 for the Appalachia asset financing does not seem so far off the mark to me. Of course, that will look disappointing if prices keep rising sharply at all durations. Maybe they can sell more at 6-years if so?

It won't be just the last two years not hedged. They can't hedge 100% to allow for potential disruption to supply and unexpected rises in costs. It will still be a high figure, though. I'd like to know more about this. No doubt it will come out in time.

[woodhawk] 08/6/2022 14:45

Are you sure you are not getting confused with witholding tax - rather than windfall? Which would be 15% for non-Sipped shares if you have completed a W-8BEN.

I'm sure your broker has no better idea what *might* transpire than anyone else regarding any windfall tax. Or perhaps he has a direct line to Biden?

[mrnumpty] 08/6/2022 14:22

There has been some discussion on the LSE chat site for DEC about whether the US Govt imposes a withholding tax on the dividends paid by DEC . Some commentators on the LSE site seem to think that this cannot be done but , having just contacted my ( large , National ) broker , I was informed that this will be applied at 15% . Unfortunate , but the dividend is very generous and , anyway , it’s primarily capital growth which I’m seeking and the autumn and the consequent urgent need for gas will very soon be upon us . It might even dawn on our Great Helmsman that all of his wind turbines and solar panels need a reliable electricity back-up , and it’s going to be a very , very long time before any new nuclear power plants are built . Sure , DEC operates in the USA , but its product is subject to global factors .

[gary1966] 08/6/2022 14:10

Aleman,

I am just trying to make the point that as part of the securitised debt financing they were obliged to agree hedge prices up to 2028. It is only the last two years of the SD that aren't hedged and so our hedged position must now be quite large all the way out to 2028 and it was at prices nothing like what the futures market are currently showing during that 6 year timeframe.

[aleman] 08/6/2022 13:56

The hedging means the company is bigger than it would otherwise have been. And that's looking backwards. Shares look forward. Prices are up. Initially, it was on shorter time frames but in the last 4 months everything has risen about 50%. Here's the 6 year contract:


free stock charts from uk.advfn.com


DEC is constantly selling into all this. Any contract they are selling into at the moment is up 50% in the last 4 months. Mid-ranges maybe a touch more. It's pointless looking backwards. We need some numbers to see how this all works into margins, what with hedging, taxes and constant acquisitions. It's all rather cloudy but the pricing environment is very strong over all durations. I keep saying I'll stop posting prices when they calm down. Well, there's been no sign of that!

[gary1966] 08/6/2022 13:21

Aleman,

Shame we are heavily hedged in the medium term then as part of the securitised debt financing as it is the debt providers that are going to benefit the most. This is the only downside of the securitised debt, if the gas price moves up appreciably.

[lomand] 08/6/2022 09:43

Every comment I am reading from the Us oil and gas producers shows that despite the high prices any additional production will be relatively modest. Their investors are keeping a close eye on them to ensure that money is not wasted. The sector has been demonised for the past few years and I don't blame them.

[aleman] 08/6/2022 09:06

Whilst shorter contracts have hit new highs of late, allegedly on forecasts of hot weather in the southern US, the bigger movement has actually been in mid range futures, suggesting it's not actually this summer's weather behind the rises. Mid range contracts all seem to be up 50% or so in only 4 months. (And remember - Rusty said they make lots of cash above $3.)

Dec 2024 contract


free stock charts from uk.advfn.com

[owenski] 07/6/2022 21:43

Can't see prices coming down for some time to come and hedging will be moving up as existing contracts eventually renew.

Would suggest DEC will be moving higher.

[11_percent] 06/6/2022 23:10

Natural Gas Futures Hit 13-Year High As Traders Expect "Blistering Hot Summer"
By Tom Kool - Jun 06, 2022, 4:09 PM CDT.

[podgyted] 06/6/2022 22:50

That doesn't surprise me A.

What interests me is that energy requirements in the US are rising at the same time they have committed to exporting to Europe.

It seems to me there is a new norm which the market has yet to wake up to.

But I may be wrong!

[aleman] 06/6/2022 21:29

It's only the contracts less than a year that have jumped since this morning.

[aleman] 06/6/2022 09:15

Prices all going up again - medium and longer durations hitting new highs.

July 2023


free stock charts from uk.advfn.com


July 2025


free stock charts from uk.advfn.com

[johnhemming] 06/6/2022 07:17

Manchin is unlikely to support it. In the UK corporation tax is paid on realised profits. I would assume the USA is the same, but given that the company plans for stability it is unlikely to have windfall profits.

[lab305] 06/6/2022 03:50

Well since we make ever increasing losses and apparently pay tax on gas at current prices rather than the derisory 3 dollars we are getting we shouldn't have to worry about it.

[sunbed44] 05/6/2022 21:13

hTTps://oilprice.com/Energy/Energy-General/Biden-Administration-Considers-A-Windfall-Tax-On-Oil-And-Gas-Profits.html

[tom111] 04/6/2022 13:52

Thanks scrawl I forgot it has to be passed by 2 houses so the the chances look remote cheers

[scrwal] 04/6/2022 13:13

tom111

A US windfall tax would affect DEC as a gas producer. However given how US politics works it may be unlikely that a bill could be pushed though both houses.
It seems that US companies don't learn from past events regarding buy backs when the airlines spent loads and then got clobbered by covid and had to get financing which was close to what had been spent. Exxon has doubled its quarterly profit to $5.48Bn and will now triple its buybacks to $30Bn through 2023.

In the oil and gas race DEC is the tortoise with the explorers being the hares. DEC isn't likely to crash and gives good returns whilst it steadily plods along.

[lomand] 04/6/2022 10:43

The hedging is relevant to the market cap. Holders should realise that the strategy of the company means that the share price will not be heavily correlated with gas prices compared with an E&P gas co. This is all about replacing assets at good prices and driving production costs down to some of the lowest in the industry and booking the spread against the hedges. If it does this successfully, using ABS to grow its assets, the equity value will increase as the debt is paid down. Having said that, consistent gas prices above $4 will certainly help. Recession or not, we are at or close to peak gas production and if you believe gas is essential for power generation it's a relatively safe place to be for the next decade.

[tom111] 04/6/2022 09:23

Sunbed whats your thoughts on Bidens mention of windfall tax although imo it wont effect this company