Diversified Energy Share Discussion Threads

[aleman] 16/6/2022 14:21

After today's modest rises, you can't really see much effect of Freeport on contracts longer than around Nov 2023 (below). And since the company says it doesn't expect any issues or constraints from Freeport in supplying its customers, you might as well forget about it from DEC's point of view.


free stock charts from uk.advfn.com

[scrwal] 16/6/2022 14:05

greygeorge - if I was concerned about or didn't like the hedging policy then I wouldn't be invested here but as I have posted previously DEC is the largest holding in my portfolio at over 10% and I do know exactly what I invest in. It doesn't mean I agree 100% with what the directors of my holdings do but I will express my opinions about things in a polite and courteous way and if they don't fit in with what people think then so be it.

[greygeorge] 16/6/2022 13:34

scrwal, I understand your - and others' - concerns regarding the hedging strategy employed by DEC. but the simple inescapable inevitable fact is what they do is not unique, or radical, or innovative, or anything else that makes them stand out from the rest of the US oil and gas producers. For better or for worse, hedging is a commonplace, almost mandatory pre-requisite in the industry. For better or worse, it was, and is, and will forever be a fatc of life any investor in oil and gas production companies should be prepared to accept. If the percentage of DEC hedged productivity isn't to your - or anybody else's liking, there are many other companies with lower hedging percentages out there. Just know what you're investing in.

hxxps://oilprice.com/Energy/Natural-Gas/US-Natural-Gas-Producers-Face-Billions-In-Hedging-Losses-In-2022.html

[lomand] 16/6/2022 13:28

scrawl. I agree although if Rusty wants the market cap for a US listing he will need some bigger deals. Hopefully there are operators out there with heavy debts. Rising interest rates and widening credit spreads may flush out these assets. I don't see many other competitors in the market set up to manage low yielding assets. Having a big financial partner and established ABS relationships puts DEC in the box seats! Here is hoping! Stock remains best risk adjusted buys out there in this market.

[greygeorge] 16/6/2022 12:51

cassini,I'm sure I probably missed a number of occasions where the share price may have dipped to sub 65p over the past seven years, but I was looking at the time-line provided by lab305 himself :

'...I started buying these on 23 June 2017 and bought around 500k shares over the next six months...'

He also stated a few weeks ago he's added at around 117p, which is a puzzling strategy for a millionaire who's holding a large position and is so disgusted and disillusioned by management of DEC. Apparently though, according to lab305, the cable rate is far more important in his continued holding in this company than is the actual business strategy.

[scrwal] 16/6/2022 12:32

I'm hoping that Rusty can make a few more $50M deals like the last one.

I think he can pick up the smaller parcels cheaply as DEC may be the only company doing so creating a buyers market. The larger deals could be made by more companies which tilts the value in a sellers favour.

Another aspect is that the smaller deals are more likely to have low volumes of unhedged production which appeals to me on several grounds - more cash available in the short term which can be used to "tidy up" the assets acquired via capping/repairs and additional measures to reduce emissions. Cash left over is not used on dividends.
The hedging should be linked to 2024 and beyond.
This will be a deviation from the effective master plan but it gives the company the chance to rake in some extra $s now and hedge well above the $3 point.

I will hold my hand up and say the hedging policy does irk me at times but I fully understand why it is done and I have always said that DEC is a well run company. I just get frustrated by the current total disconnect between the market price and DECs hedged price.

Anyways let's hope the tortoise plods along it's path with no more stupid events rocking the boat.

[lomand] 16/6/2022 07:49

Assuming no capital growth and no increased dividends an 11%% annual return is attractive relative to the average return from the stock market. The key to sustaining and growing these returns wil be the ability to continue to buy replacement reserves at an attractive price. The master stroke so far is the use of ABS with instead of volatile bank debt, the cost and availability of which can dramatically reduce returns. You either buy into the strategy or you look elsewhere.

[johnhemming] 16/6/2022 06:57

My view about DEC's strategy is that it is a low risk approach to making a reasonable living. It may not give a 10 bagger. I was lucky enough to get some stock at the 60-70p range, but I first bought around £1.20.

They are responsibly mananged and handling the tight rope of carbon emissions in an effective manner.

Hedging is about reducing risk. It does reduce the reward when prices go up, but DEC will have some unhedged output which is left after the debt has been paid by the hedged output. As you move down the time line remembering that the debt is being amortised DEC has less debt, but still quite a high income.

[pro_s2009] 15/6/2022 23:38

podgyted.... Its addiction... You have 1 million, you want 2. Have 2, want 3..........

[cassini] 15/6/2022 23:35

Point of order: the priced dropped to 60p in March 2020 so it's perfectly possible to have loaded up at that point...

[woodhawk] 15/6/2022 22:43

Very odd that they bother posting day after day isn't it? Almost like they have nothing better to do...

[podgyted] 15/6/2022 22:22

It's surprising how many millionaires post on ADVFN.

[lab305] 15/6/2022 21:04

greygorge you're a bit light , last dividend was about 15700 but that will be higher on 30 June next with the surging dollar. That should buy plenty more Lego ! I understand your scepticism as why would someone with such a large investment disapprove of some of its policies. Simple , I believe that the very aggressive hedging has cost us very dear , and me more than most. Still the dollar is our friend and we look forward to higher dividends.
You will be glad to know that I will now cease to post on this thread. My view of the company has brought the pack upon me. Any criticism is not allowed not surprisingly from investors who believe that it is infallible.

[greygeorge] 15/6/2022 19:42

Also, lab305, I can't see how your average share price purchase equates to 65p, when the last time they were at 65p was May 2017, which was a month before you say you started buying ? they only briefly dropped to 65p on / around 16th August 2017, and 64p on / around 29th August 2017. So unless you timed your buys impeccably, your claim that your average share purchase price is 65p doesn't add up ? Maybe I'm wrong, please enlighten me. Thanks.

[greygeorge] 15/6/2022 19:30

So, lab305, you've got about £400,000 invested in this company ? And you're picking up about £60,000 per year in dividends ?

[podgyted] 15/6/2022 15:05

FWIW I was a bit bemused by your comments lab305 - I didn't invest at AIM IPO but a few months after and my memory was of hedging and dividends - so I looked back.

2017 Interim accounts:-

"Hedging
To manage its cash flows in a volatile commodity price environment, DGO uses a combination of physical and financial derivative instruments. As
required by its Senior Secured Credit Facility, DGO executed a combination of fixed price physical contracts, price swap financial contracts and twoway collar financial contracts equal to approximately 75% of the Company's forecasted production volumes for a 36-month rolling period. Please refer
to note 13 to our interim financial statements for additional information regarding DGO's hedge portfolio."

"Dividend
The Board has announced an interim dividend of 1.99 cents per ordinary share to be paid on 20 December 2017 to those shareholders in the
register on 17 November 2017, and follows the dividend of 1.99 cents per ordinary share paid to shareholders on 31 July 2017."

[redtom1] 15/6/2022 14:57

Strong dollar means increasing dividend yield. Still around 11% which is very nice!

[lab305] 15/6/2022 14:26

greygorge whining maybe but ill-informed not. I stand by what I have written and would be happy for you to point out any inaccuracies. I understood these forums were to express different sides of an argument and opinions. Unfortunately this one is replete with partisan investors who think the company can do no wrong. The irony is that I am a large investor here but am not wearing rose tinted spectacles. One reason I stay is I expected the pound to drop against the dollar and this is one of the best dollar earning stocks around. Consequently I am on course to receive a near 10% increase in the dividend despite the hedging not because of it .
GBP-USD X-RATE
1.2061USD

[greygeorge] 15/6/2022 13:53

lab305, with respect, I don't think anybody here really cares what you think,re :

'...I am sick of the sycophantic rubbish and in some cases complete lack of historical knowledge exhibited by some on this thread...'

You've proven to be nothing more than a whining, ill-informed, know-nothing amateur chancer who should probably never again invest in anything more complicated than lego.

Just saying.

[aleman] 15/6/2022 11:48

Thanks. That's very useful confirmation on my thoughts. I know pricing seems pretty obvious but I could only speculate the vast majority of gas would flow Northeast in line with flowmaps available online, as per 3.8 here:

[redtom1] 15/6/2022 11:42

Aleman, this is the response from DEC itself "The Company does not expect any issue with physical constraints or ability to flow our product to sales points due to the announced outage at the Freeport LNG facility, and we would expect limited impact to Diversified’s realized prices due to the extent of our hedge coverage for the remainder of the year."

[scrwal] 14/6/2022 21:36

The longer term futures may well be reasonably stable as it is likely that they reflect the longer term market price expectations and would only come under pressure if there is a significant drop on shorter futures.