Diversified Energy Share Discussion Threads

[lomand] 04/8/2022 08:55

Interesting article. As good as any research I have read.

[fardels bear] 03/8/2022 08:52

Normally the kiss of death a tip at IC but every dog has its day and Parkmead's assets are superb, if he can monetise them. I wouldn't have thought it would be of interest to investors with a profile that includes DEC though; not unless they are also fond of the geegees.

[mrnumpty] 02/8/2022 17:10

On 28th July , at 8.13 am , I referred here to another gas producer but which has significant differences to DEC , such as : much smaller market cap ; no hedging of prices , so fully exposed to spot prices ; no dividend ; gas production in the Netherlands , but also North Sea oil prospects and a couple of wind farms in Scotland . That company , Parkmead , was very recently tipped as a “ buy “ by Simon Thompson , the small cap tipster of Investors’ Chronicle as a “ buy “ at 49 p . Simon Thompson doesn’t always get it right , but Parkmead shares today jumped up 14.13 % to 74.34 p . Yes , to some extent I was ramping Parkmead here , but I hope some of you bought in . I own both DEC and Parkmead .

[pro_s2009] 02/8/2022 09:53

Cenkos comment :

Diversified Energy Company BUY (DEC.L, 123.7p, £1053m) has acquired the well services and plugging assets and operations of Contractor Services of West Virginia, representing the Company’s third acquisition of an Appalachian asset retirement operator during 2022.

The acquisition enhances Diversified’s ability to retire more wells, scales the business and drives further efficiencies in the Company’s internal well plugging programme, and provides additional third-party revenues from other operators and state agencies to offset Diversified’s own well retirement costs. Diversified’s plugging programme now includes 15 well plugging rigs and expands Diversified’s suite of offerings to include cementing, wireline, trucking and construction services, reduce the need to incur related contractor expenses and provide incremental revenue streams. Diversified Energy.

Diversified has also entered into a purchase and sale agreement to acquire certain upstream assets in Oklahoma and Texas within the Company’s Central Region from ConocoPhillips for a purchase price of US$240m. The estimated acquisition cost at closing is expected to be US$210m, and represents a 2.5x acquisition price multiple, on an estimated Adjusted EBITDA of US$82m.

The acquisition adds 31mmboe of net PDP reserves, with a PV10 of US$297m, accordingly the purchase price represents an estimated PDP valuation of PV17. The assets have a cash margin of 70% and a modest annual decline rate of 8% that continues to shallow Diversified’s consolidated corporate decline rate of 8.5%. The acquisition includes 1,500 producing wells and represents Diversified’s sixth major acquisition with the Central Region. Diversified will finance the acquisition with cash on hand and existing availability on its revolving credit facility, resulting in a pro-forma net debt/adjusted EBITDA of 2.2x.

The Company’s post-acquisition funding liquidity is cUS$250m before any increase in the Company’s RCF borrowing base for the additional collateral from the
acquisition

[scrwal] 01/8/2022 13:38

Interims out next Monday.

[smart1e] 30/7/2022 17:24

thx for posting LG; it is refreshing to read some common sense.

[pro_s2009] 29/7/2022 13:02

O/T I have added another High Dividend Yield thread...this time with GKP.



Both DEC and GKP offer very high yield. GKP is of course more risky, but also has the near term potential of becomnig debt free and also.......being bought out fairly soon.

[gary1966] 29/7/2022 11:37

1knocker,

I have no doubt you will do well out of the ones you sold today as I am certain the gap at 110.3p will be filled at some point as they always get filled. That will be a very nice scalp on the ones you have sold today. Well done.

[chipperfrd] 29/7/2022 11:37

1knocker,
I am at the other extreme. Bit late to this stock so still in the build process.

[1knocker] 29/7/2022 11:07

Nice to see us up a bit the last few days. I think DEC is still seriously undervalued, but I sold a few today as I am rather overweight having been unable to resist when the price went sub 110. DEC is still my largest holding, by a distance, so it is gratifying to have got my average back below 100 (just). This is a volatile market, probably with plenty more kicks in store, so it is important to maintain discipline, but it is always a wrench to sell any DEC!

[aleman] 28/7/2022 14:27

Continuing rise in short prices is washing over a bit into longer contracts.

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[scrwal] 28/7/2022 13:13

The agreement with Oaktree is for acquisitions greater than $250m. Both sides have been flexible about this in the past but there is no obligation on Oaktree to participate.
It could be there may be another smaller deal in the pipeline of say $160m where Oaktree have agreed to participate then on an aggregate basis of both deals - we don't really know.

Given the size of the acquisition it was a given that DEC would apply its standard hedging policy. If it had been a $50m tiddler they may have let it run for a while.

[keesp1966] 28/7/2022 11:20

True Gary, prices are high and therefore they need to lock in these prices by hedging

[gary1966] 28/7/2022 09:37

keesp1966,

You are quite correct but still means this deal has been priced up at around $6.

[keesp1966] 28/7/2022 09:26

Gary, the ebitda multiple is based on nymex strip prices which - as far as i know - covers a period of 24 months starting from acquisition date. So, that shouldn’t be far off the ebitda after hedging.

[gary1966] 28/7/2022 09:16

LG,

Oaktree were involved in the last acquisition back in April. It may be that they join this one retrospectively as has been done in the past. If they don’t then it may mean that they aren’t so enamoured with this deal. Time will tell.

[gary1966] 28/7/2022 09:08

Spangle93,

As I stated it just isn’t their way not to hedge and so by default the EBITDA and margin on this deal will be quite a bit lower going forward than the figures quoted. If I have understood it correctly when calculating the figures they have used a gas price in excess of $8. As Carcosa has pointed out though there are cost synergies to be had but can’t believe that will compensate for the differential between $8+ and the eventual price that they will sell it at which will be almost half at current hedge prices.

[spangle93] 28/7/2022 08:34

I wonder whether they will leave this production unhedged to benefit from current prices - surely there's already enough hedged production to meet all obligations

[lord gnome] 28/7/2022 08:17

Indeed Gary. Oaktree has gone very quiet. I suspect that this deal might just be too small for them. Either that, or they have cooled off with the joint venture. Certainly, nothing major seems to be happening on that front given all the trumpeting when the tie-up was announced.

[carcosa] 28/7/2022 08:14

Gary, from the presentation:

" Adj. EBITDA; assumes historical cost structure using NYMEX strip as of 26 July 2022 and is not reflective of synergies that may be realised following post-acquisition integration"

[mrnumpty] 28/7/2022 08:13

Fellow holders of DEC might be interested in Parkmead PLC which is also a gas producer , but with significant differences . Whereas DEC's output is largely hedged at prices significantly below current prices ( but with the hope that , as existing contracts expire , the Company will lock in higher rates ) and also pays a very generous dividend , Parkmead is almost a mirror image : no hedging , but also no dividend , its gas fields are in the Netherlands , and it also owns a couple of wind farms in Scotland . Parkmead was recently tipped as a " buy " by Simon Thompson , the small-cap tipster of the Investors' Chronicle at 49p , but it is already at about 64p , but it is forecast , elsewhere on the internet (" Parkmead share price forecast " ) as reaching £ 1.64 . The CEO of Parked , Tom Cross , holds about 25% and he was the CEO of the much larger-cap and successful Dana Petroleum ( which I held ) until a hostile takeover about ten years ago . I hold both DEC and Parkmead , so I am " ramping " Parkmead to some extent , but the two companies seem to complement each other in ones exposure to rising gas prices . Do your own research .

[gary1966] 28/7/2022 08:07

No mention of Oaktree on this one which seems strange. I am assuming that EBITDA figures are quoted based on the prevailing market price being received. DEC model will be to hedge most of this production which by default will substantially reduce the EBITDA.

[lord gnome] 28/7/2022 07:56

Indeed, that does seem to be another excellent deal. A 20% increase in EBITDA and no equity fund raise is certainly not to be sniffed at. I think the market is going to like this. Well done Rusty and his team.

[tonytyke2] 28/7/2022 07:47

They have found a better gap with a $240m purchase this morning. Great news!

[gary1966] 27/7/2022 08:29

Gap on the chart at 110.30p from 15/07 if you are in to that kind of thing but based on DEC history will be filled at some point.

GLA